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Notes to Accounts of Bharti Airtel Ltd.

Mar 31, 2015

1. Corporate Information

Bharti Airtel Limited ('the Company') incorporated in India on July 7, 1995, is a company promoted by Bharti Telecom Limited ('BTL'), a company incorporated under the laws of India. The Company's shares are publicly traded on the National Stock Exchange ('NSE') and the Bombay Stock Exchange ('BSE'), India. The Registered office of the Company is situated at Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase – II, New Delhi – 110070.

The Company is a leading telecommunication service provider in India providing telecommunication systems and services.

2. Basis of Preparation

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The financial statements have been prepared to comply in all material respects with the accounting standards notified under Section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014 issued by the Ministry of Corporate Affairs. The financial statements have been prepared under the historical cost convention and on an accrual basis except in case of assets for which revaluation is carried out and certain derivative financial instruments (refer note 3.13). The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

These financial statements are presented in Indian Rupees ('Rupees' or 'Rs.') and all amount are rounded to the nearest million ('Mn'), except as stated otherwise.

3. Information about Business Segments - Primary

Segment Definitions:

The Company's operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

Mobile Services – These services cover voice and data telecom services provided through wireless technology in India (2G/3G/4G). This includes the captive national long distance networks which primarily provide connectivity to the mobile services business in India. This also includes intra city fibre networks.

Telemedia Services – These services cover voice and data communications based on fixed network and broadband technology.

Airtel Business – These services cover end-to-end telecom solutions being provided to large Indian and global corporations by serving as a single point of contact for all telecommunication needs across data and voice (domestic as well as international long distance), network integration and managed services.

Unallocated – Unallocated includes other income, profits/ (losses), assets and liabilities of the Company which are not allocated to the business segments and is primarily related to the corporate headquarter of the Company. These also include current taxes (net of provisions of tax), deferred taxes (net), MAT credit and borrowings not allocated to the business segments.

4. Contingent Liabilities

(i) Total Guarantees outstanding as of March 31, 2015 amounting to Rs. 101,379 Mn (March 31, 2014 – Rs. 57,582 Mn) have been issued by banks and financial institutions on behalf of the Company. These guarantees include certain financial bank guarantees which have been given for subjudice matters and in compliance with licensing conditions, the amount with respect to these have been disclosed under capital commitments, contingencies and liabilities, as applicable, in compliance with the applicable accounting standards.

Corporate Guarantees outstanding as of March 31, 2015 amounting to Rs. 857,497 Mn (March 31, 2014 - Rs. 770,121 Mn) have been given to banks, financial institutions and third parties on behalf of Group Companies at no cost to the latter.

(ii) Claims against the Company not acknowledged as debt (excluding cases where the possibility of any outflow in settlement is remote):

b) Sales Tax and Service Tax Sales Tax

The claims for sales tax as of March 31, 2015 comprised the cases relating to:

i. the appropriateness of the declarations made by the Company under the relevant sales tax legislations which was primarily procedural in nature;

ii. the applicable sales tax on disposals of certain property and equipment items;

iii. lease circuit / broadband connectivity services;

iv. the applicability of sales tax on sale of SIM cards, SIM replacements, VAS, Handsets and Modem rentals;

v. In the State of J&K, the Company has disputed the levy of General Sales Tax on its telecom services and towards which the Company has received a stay from the Hon'ble J&K High Court. The demands received to date have been disclosed under contingent liabilities.

Service Tax

The service tax demands as of March 31, 2015 relate to:

i. cenvat claimed on tower and related material,

ii. levy of service tax on SIM cards,

iii. cenvat credit disallowed for procedural lapses and inadmissibility of credit,

iv. disallowance of cenvat credit used in excess of 20% limit, and

v. employee talk time

c) Income tax

Income tax demands under appeal mainly included the appeals filed by the Company before various appellate authorities against the disallowance by the income tax authorities of certain expenses being claimed, non- deduction of tax at source with respect to dealers/ distributor's margin and non-deduction of tax on payments to international operators for access charges, etc.

d) Custom Duty

The custom authorities, in some states, demanded custom duty for the imports of special software on the ground that this would form part of the hardware on which it was pre-loaded at the time of import. The view of the Company is that such imports should not be subject to any custom duty as it would be an operating software exempt from any custom duty. In response to the application filed by the Company, the Hon'ble CESTAT has passed an order in favour of the custom authorities. The Company has filed an appeal with Hon'ble Supreme Court against the CESTAT order.

e) Entry Tax

In certain states an entry tax is levied on receipt of material from outside the state. This position has been challenged by the Company in the respective states, on the grounds that the specific entry tax is ultra vires the Constitution. Classification issues have also been raised whereby, in view of the Company, the material proposed to be taxed is not covered under the specific category.

f) Access Charges (Interconnect Usage Charges)/Port Charges

(i) Interconnect charges are based on the Interconnect Usage Charges (IUC) agreements between the operators although the IUC rates are governed by the IUC guidelines issued by Telecom Regulatory Authority of India (TRAI). BSNL has raised a demand requiring the Company to pay the interconnect charges at the rates contrary to the regulations issued by TRAI. The Company filed a petition against that demand with the Telecom Disputes Settlement and Appellate Tribunal ('TDSAT') which passed a status quo order, stating that only the admitted amounts based on the regulations would need to be paid by the Company. The final order was also passed in our favour. BSNL has challenged the same in Hon'ble Supreme Court. However, no stay has been granted.

(ii) In another proceeding with respect to Distance Based Carriage Charges, the Hon'ble TDSAT in its order dated May 21, 2010, allowed BSNL appeal praying to recover distance based carriage charges. On filing of appeal by the telecom operators, Hon'ble Supreme Court asked the telecom operators to furnish details of distance- based carriage charges owed by them to BSNL. Further, in a subsequent hearing held on August 30, 2010 Hon'ble Supreme Court sought the quantum of amount in dispute from all the operators as well as BSNL and directed both BSNL and private telecom operators to furnish Call Data Records (CDRs) to TRAI. The CDRs have been furnished to TRAI.

(iii) In another issue with respect to Port Charges, in 2001, TRAI had prescribed slab based rate of port charges payable by private operators which were subsequently reduced in the year 2007 by TRAI. On BSNL's appeal, TDSAT passed it's judgement in favour of BSNL, and held that the pre-2007 rates shall be applicable prospectively from May 29, 2010. The rates were further revised downwards by TRAI in 2012. On BSNL's appeal, TDSAT declined to stay the revised regulation.

Further, the Hon'ble Supreme Court vide its judgement dated December 6, 2013, passed in another matter, held that TRAI is empowered to issue regulations on any matter under Section 11(1)(b) of TRAI Act and the same cannot be challenged before TDSAT. Accordingly, all matters raised before TDSAT, wherein TDSAT had interfered in Appeal and passed judgements, do not have any significance. However, parties can file Writ Petitions before High Court challenging such regulations.

The Company believes that the above said judgement has further strengthened the position of the Company on many issues with respect to Regulations which had been in its favour and impugned before TDSAT.

g) Department of Telecommunications ('DoT') Demands

i) The Company has not been able to meet its roll out obligations fully due to certain non-controllable factors like Telecommunication Engineering Centre testing, Standing Advisory Committee of Radio Frequency Allocations clearance, non availability of spectrum, etc. The Company has received show cause notices from DoT for 14 of its circles for non-fulfillment of its roll out obligations and these have been replied to. DoT has reviewed and revised the criteria and there has been no further development on this matter since then.

ii) DoT demands include demands raised for contentious matters relating to computation of license fees and spectrum charges.

iii) DoT demands include alleged short payment of license fee for financial year 06-07 and financial year 07-08 due to difference of interpretation of Adjusted Gross Revenue (AGR) between the Company and DoT and interest thereon, against which the Company has obtained stay from appropriate Hon'ble High Courts & TDSAT. TDSAT has pronounced its judgement on April 23, 2015, directing DoT to rework and issues fresh demands to the operators.

iv) DoT demands also include the contentious matters in respect of subscriber verification norms and regulations including validity of certain documents allowed as Proof of Address / Identity in certain mobility circles.

v) DoT demands also include penalty for alleged failure to meet the procedural requirement for submission of EMF radiation self certification.

The above stated matters are being contested by the Company and the Company, based on legal advice, believes that it has complied with all license related regulations as and when prescribed and does not expect any loss relating to these matters.

In addition to the amount disclosed in the table above, the contingent liability on DoT matters includes the following:

vi) Post the Hon'ble Supreme Court Judgment on October 11, 2011 on components of Adjusted Gross Revenue for computation of license fee, based on the legal advice, the Company believes that the realised and unrealised foreign exchange gain should not be included in Adjusted Gross Revenue (AGR) for computation of license fee thereon. Accordingly, the license fee on such foreign exchange gain has not been provided in these financial statements. Also, due to ambiguity of interpretation of 'foreign exchange differences', the license fee impact on such exchange differences is not quantifiable and has not been included in the table above. Further, as per the Order dated June 18, 2012 of the Kerala High Court, stay has been obtained, wherein the licensee can continue making the payment as was being done throughout the period of license on telecom activities. Further as stated in point (iii) above, TDSAT has pronounced its judgement on April 23, 2015, directing DoT to rework and issue fresh demands to the operators.

vii) On January 8, 2013, the Department of Telecommunications ('DoT') issued a demand on the Company for Rs. 51,353 Mn towards levy of one time spectrum charge. The demand includes a retrospective charges of Rs. 8,940 Mn for holding GSM Spectrum beyond 6.2 MHz for the period from July 1, 2008 to December 31, 2012 and also a prospective charge of Rs. 42,413 Mn for GSM spectrum held beyond 4.4 MHz for the period from January 1, 2013, till the expiry of the initial terms of the respective licenses.

In the opinion of the Company, inter-alia, the above demand amounts to alteration of financial terms of the licenses issued in the past. Based on a petition filed by the Company, the Hon'ble High Court of Bombay, vide its order dated January 28, 2013, has directed the DoT to respond and not to take any coercive action until the next date of hearing. The DoT has filed its reply and the next date of hearing has been fixed on September 9, 2015.

viii) The Department of Telecommunications (DoT) had issued notices to the Company as well as various other Telecom Service Providers to stop provision of services under 3G Intra Circle Roaming (ICR) arrangements in the service areas where such service providers had not been allocated 3G Spectrum. DoT also levied a financial penalty of Rs. 3,500 Mn. Company contested the notices and upon various rounds of litigations, ultimately, the TDSAT, vide its judgement dated April 29, 2014, held 3G ICR arrangements to be a competent service and compliant with the licensing conditions and quashed the notice imposing penalty. The DoT has challenged the order of TDSAT in an appeal filed before the Hon'ble Supreme Court, which has been admitted. However Hon'ble Supreme Court has refused to grant any interim order during the pendency of the appeal.

h) Others

Others mainly include disputed demands for consumption tax, disputes before consumer forum and with respect to labour cases and a potential claim for liquidated damages.

i) Bharti Mobinet Limited ('BMNL') litigation

The Company is in litigation in various proceedings at various stages and in various forums with DSS Enterprises Private Limited (DSS) (which had 0.34 per cent equity interest in erstwhile Bharti Cellular Limited (BCL)) on claims of specific performance in respect of alleged agreements to sell the equity interest of DSS in erstwhile BMNL to the Company. In respect of one of the transactions with respect to purchase of 10.5% share of DSS in Skycell by the Company, Crystal Technologies Private Limited ('Crystal'), an intermediary, initiated arbitration proceedings against the Company demanding Rs. 195 Mn regarding termination of its appointment as a consultant to negotiate with DSS for the sale of DSS stake in erstwhile BMNL to the Company. The Ld. Arbitrator partly allowed the award for a sum of Rs. 31 Mn, 9% interest from period October 3, 2001 till date of award (i.e May 28, 2009) and a further 18% interest from date of award to date of payment. The Company appealed in Hon'ble High Court against the award. The Single Judge while dismissing the appeal reduced the rate of interest from 18% to 12%. The matter was appealed thereafter to Division Bench and finally to Hon'ble Supreme Court wherein the matter has been admitted on the condition that the amount as per Single Judge Order shall be secured in Hon'ble Supreme Court, which has been done. The matter will now come up in due course.

DSS has also filed a suit against a previous shareholder of BMNL and the Company challenging the transfer of shares by that shareholder to the Company. The matter is to be reheard.

DSS has also initiated arbitration proceedings seeking direction for restoration of the cellular license and the entire business associated with it including all assets of BCL/BMNL to DSS or alternatively, an award for damages. An interim stay was granted by the Hon'ble Delhi High Court with respect to the commencement of arbitration proceedings. The stay was made absolute.

DSS Enterprises has preferred an SLP challenging the order dated May 12, 2005 passed by the Hon'ble Delhi High Court in Company Appeal No.30 of 2004. The Company Appeal was dismissed by Hon'ble Delhi High Court on the grounds of non-disclosure of material facts before the Hon'ble High Court. This appeal has been admitted by the Hon'ble Supreme Court and our Counter Affidavit has been filed, matter is to be now listed for hearing in due course.

The liability, if any, of the Company arising out of above litigation cannot be currently estimated. Since the amalgamation of BCL and erstwhile Bharti Infotel Limited (BIL) with the Company, DSS, a minority shareholder in BCL, had been issued 2,722,125 equity shares of Rs. 10 each (5,444,250 equity shares of Rs. 5 each post split) bringing the share of DSS in the Company down to 0.136% as of March 31, 2015.

5. Capital and Other Commitments

a) Estimated amount of contracts to be executed on capital account and not provided for (net of advances) Rs. 274,832 Mn as of March 31, 2015 (March 31, 2014 - Rs. 159,239 Mn). (including Rs. 244,040 Mn (March 31, 2014 - Rs. 129,129 Mn) towards spectrum (refer note 38(ix))

b) Under certain Outsourcing Agreements, the Company has estimated commitments to pay Rs. Nil as of March 31, 2015 (March 31, 2014 - Rs. 311 Mn) comprising of assets and service charges. The amount represents total minimum commitment over the unexpired period of the contracts (uptill 5 years from the reporting date), since it is not possible for the Company to determine the extent of assets and services to be provided over the unexpired period of the contract. However, the actual charges/ payments may exceed the above mentioned minimum commitment based on the terms of contract.

6. The Company has undertaken to provide financial support, to its subsidiaries, namely, Bharti Airtel Services Limited, Bharti Telemedia Limited, Nxtra Data Limited, Telesonic Networks Limited, Airtel M Commerce Services Limited, Bharti Airtel (USA) Limited, Bharti Airtel (Hongkong) Limited, Bharti Airtel Lanka (Private) Limited, Bharti Airtel Holdings (Singapore) Pte Limited including its subsidiaries and Bharti Airtel International (Netherlands) B.V. including its subsidiaries.

7. Exceptional Items

a) During the year ended March 31, 2014, the Company had reassessed useful life of certain categories of network assets due to technological developments and had revised the remaining useful life in respect of those assets effective April 1, 2013. Out of those assets, additional depreciation charge of Rs. 2,071 Mn on assets for which the revised useful life had expired on April 1, 2013 had been recognised and disclosed as 'Exceptional Items' and additional depreciation charge of Rs. 2,708 Mn for balance assets had been recognised and reflected as 'Depreciation and amortisation expense' for the year ended March 31, 2014.

b) Tax expense for the year ended March 31, 2014 includes:

i) Tax benefit of Rs. 540 Mn on above

ii) Reversal of tax provision of Rs. 640 Mn on account of settlement of an uncertain tax position

8. Preferential Allotment

During the year ended March 31, 2014, the Company had issued 199,870,006 equity shares to M/s. Three Pillars Pte. Ltd (belonging to non-promoter category), an affiliate of Qatar Foundation Endowment, constituting 5% of the post issue share capital of the Company, through preferential allotment at a price of Rs. 340 per share aggregating to Rs. 67,956 Mn. The proceeds of the preferential allotment were utilized towards the repayment of equivalent debt in accordance with the objective of the preferential allotment.

9. Acquisitions / Additional Investments / New Developments

(i) On June 25, 2013, the Company acquired additional equity stake of 2% by way of subscription to fresh equity in its existing 49% owned joint venture companies, namely, Airtel Broadband Services Private Limited ('ABSPL') (formerly known as Wireless Business Services Private Limited), Wireless Broadband Business Services (Delhi) Private Limited, Wireless Broadband Business Services (Kerala) Private Limited and Wireless Broadband Business Services (Haryana) Private Limited (together referred as "BWA entities"), for a sum of Rs. 638 Mn, thereby increasing its equity shareholding to 51% in each of these entities.

The Scheme of Arrangement ('Scheme') under Section 391 to 394 of the Companies Act, 1956 for amalgamation of Wireless Broadband Business Services (Delhi) Private Limited, Wireless Broadband Business Services (Kerala) Private Limited and Wireless Broadband Business Services (Haryana) Private Limited (collectively referred to as "the transferor companies") with ABSPL was approved by the Hon'ble High Courts of Delhi and Bombay vide order dated May 24, 2013 and June 28, 2013, respectively, with appointed date July 6, 2010, and filed with the Registrar of Companies on August 5, 2013, effective date of the Scheme. Accordingly, the transferor companies had ceased to exist and had merged into ABSPL. The shares issued to the Company in ABSPL in exchange of shares in transferor companies had been accounted for at the carrying amount of investment in the transferor companies.

On August 30, 2013, the Company increased its equity investment in ABSPL by way of conversion of loan of Rs. 49,094 Mn, thereby increasing its shareholding from 51% to 93.45% and on October 17, 2013 further acquired 371,273,844 equity shares of ABSPL for a total consideration of Rs. 6,257 Mn from Qualcomm Asia Pacific Pte. Ltd., the only other shareholder of ABSPL, thereby increasing it's shareholding to 100%. An amount of Rs. 4,104 Mn is payable upon satisfaction of certain conditions as per the share purchase agreement.

The Scheme of Arrangement ('Scheme') under Sections 391 to 394 of the Companies Act, 1956 for amalgamation of ABSPL with the Company, was approved by the Hon'ble High Courts of Delhi and Bombay on January 21, 2014 and April 11, 2014, respectively. Subsequent to the balance sheet date, the Company has filed the Scheme under Sections 391 to 394 of the Companies Act, 1956 for amalgamation of Airtel Broadband Services Private Limited ('ABSPL') (formerly known as Wireless Business Services Private Limited), a wholly owned subsidiary of the Company, with the Company, as approved by the Hon'ble High Courts of Bombay on April 11, 2014 with Registrar of Companies ('ROC') on April 9, 2015 which is the effective date and appointed date of merger. From the filing of the said Scheme with the ROC, ABSPL has ceased to exist and have merged with the Company with effect from April 9, 2015.

DoT vide its letter dated February 2, 2015, has given its approval for taking on record the merger of ABSPL with the Company, subject to certain conditions as stipulated in the letter. One of the conditions of merger requires payment of Rs. 4,361 Mn, equal to the difference between the entry fee for Unified Access Service License and entry fees paid for Internet Service Provider license. The Hon'ble TDSAT vide its interim order dated February 9, 2015 has allowed the Company to operationalize the spectrum subject to filing an undertaking that in case the petition fails, it shall pay the sum of Rs. 4,361 Mn along with interest as may be determined by the Tribunal within eight weeks from the date of judgement. The Company based on its evaluation believes that it is not probable that claim will materialise and therefor, no provision has been recognised in the books of accounts.

(ii) During the year ended March 31, 2015, the Company has increased its equity investment by way of conversion of loan into equity of Rs. 11,047 Mn in Bharti Airtel Lanka (Private) Limited.

(iii) During the year ended March 31, 2015, the Company has made equity investment of Rs. 350 Mn in Airtel M Commerce Services Limited.

(iv) During the year ended March 31, 2015, the Company has made equity investment of Rs. 39,931 Mn (USD 655 Mn) in Bharti Airtel International (Mauritius) Limited.

(v) During the year ended March 31, 2015, the Company has made equity investment of Rs. 10 Mn in FireFly Networks Limited. FireFly Networks Limited is a 50:50 joint venture of the Company and Vodafone West Limited

(vi) On August 7, 2014, in order to comply with the requirement to maintain minimum public shareholding of 25% in terms of rule 19(2)(b)/ 19A of Securities Contracts (Regulation) Rules, 1957, as amended, and Clause 40A of the equity listing agreement, the Company has sold 85 Mn shares in Bharti Infratel Limited (BIL) for Rs. 21,434 Mn, representing 4.5% shareholding in BIL. Subsequent to the transaction, the shareholding of the Company in BIL has reduced to 74.86%

Further on February 25, 2015, the Company sold 55 Mn shares for Rs. 19,255 Mn, representing 2.91% shareholdings in BIL. Subsequent to the transaction, the shareholding of the Company in BIL has reduced to 71.90%.

Excess of proceeds over the cost of investment net of associated costs, taxes and levies, amounting to Rs. 32,741 Mn has been recognised in other income.

(vii) During the year ended March 31, 2015, Bridge Mobile PTE Limited, a joint venture of the Company, has reduced its share capital by USD 14 Mn and has proportionately returned part of its share capital to all its joint venture partners. Accordingly, the Company has received Rs. 87 Mn (USD 1 per share for 1,400,000 shares).

(viii) During the year ended March 31, 2015, the Company has made equity investment of Rs. 0.50 Mn in Wynk Limited (a wholly owned subsidiary company). The main objective of the company is content procurement/aggregation including own content and selling to B2B and B2C customers.

(ix) During the year ended March 31, 2015, the Company has won the auction for 95.20 MHz spectrum in 15 service areas for an amount of Rs. 244,040 Mn in the auction conducted by the Government of India. The Company has opted for the deferred payment option and accordingly, subsequent to the balance sheet date, paid an advance of Rs. 66,496 Mn with the balance amount of Rs. 177,544 Mn payable in 10 equal installments after a moratorium period of two years. Pending the allocation of the spectrum by the Government of India, entire amount outstanding as at March 31, 2015, has been disclosed under capital commitments in the notes to the financial statements. (refer note 27)

During the year ended March 31, 2014, the Company had won the auction for 99.80 MHz spectrum in 13 service areas for an amount of Rs. 182,433 Mn in the auction conducted by the Government of India. The Company had opted for the deferred payment option and had paid an advance of Rs. 53,304 Mn with the balance amount of Rs. 129,129 Mn payable in 10 equal installments after a moratorium of two years. Pending the allocation of spectrum by the Government of India, the balance amount had been disclosed under capital commitments as at March 31, 2014 (refer note 27). During the year ended March 31, 2015, the Government of India has allocated the spectrum to the Company, accordingly the Company has recognised deferred payment liability of Rs. 129,129 Mn.

10. Investment in Joint Ventures/Jointly Owned Assets

a) Jointly owned assets

The Company has participated in various consortiums towards supply, construction, maintenance and providing long term technical support with regards to following Cable Systems. The details of the same are as follows:

b) Joint Ventures Entity

i) The Company has a Joint Venture with 9 other overseas mobile operators to form a regional alliance called the Bridge Mobile Alliance, incorporated in Singapore as Bridge Mobile Pte Limited. The principal activity of the venture is creating and developing regional mobile services and managing the Bridge Mobile Alliance Programme. As of March 31, 2015, the Company's investment in Bridge Mobile Pte Limited is USD 800,000, amounting to Rs. 34 Mn in 800,000 ordinary shares of USD 1 each which is equivalent to an ownership interest of 10.00% (March 31, 2014: Investment of USD 2.2 Mn, amounting to Rs. 92 Mn, USD 2.2 Mn ordinary shares, ownership interest 10.00%). During the year March 31, 2015, Bridge Mobile PTE Limited reduced its share capital by USD 14 Mn and has proportionately returned part of its share capital to all its joint venture partners. Accordingly, the Company has received Rs. 87 Mn (USD 1 per share for 1,400,000 shares).

ii) During the year ended March 31, 2014, the Company has increased its equity investment in Airtel Broadband Services Private Limited (ABSPL) from 49% to 100% and ABSPL became the wholly owned subsidiary of the Company.(refer note 38(i))

11. Loans and advances in the nature of loans along with maximum amount outstanding during the year as per Clause 32 of the Listing Agreement are as follows:

(a) Loan and advance in the nature of loan given to Bharti Telemedia Limited at nil interest rate is Rs. 33,395 Mn (March 31, 2014 Rs. 35,770 Mn at nil interest rate).

(b) Loan and advance in the nature of loan given to Bharti Airtel Lanka (Private) Limited at nil interest rate is Rs. 11,047 Mn (March 31, 2014 Rs. 11,047 Mn at nil interest rate)

(c) Loan and advance in the nature of loan given to Bharti Airtel International (Netherlands) B.V at LIBOR 1.25% interest rate is Rs. 32,047 Mn (March 31, 2014 Rs. 10,895 Mn at LIBOR 1.75% interest rate).

(d) Loan and advance in the nature of loan given to Telesonic Networks Limited at SBI base rate is Rs. 90 Mn (March 31, 2014 Rs. 90 Mn at SBI PLR 1% interest rate).

(e) Loan and advance in the nature of loan given to Bharti Teleports Limited at SBI base rate 1% interest rate is Rs. 466 Mn (March 31, 2014 Rs. 412 Mn at SBI base rate 1% interest rate).

(f) Loan and advance in the nature of loan given to Bharti International (Singapore) Pte Limited at LIBOR 1.25% interest rate is Rs. 8,887 Mn (March 31, 2014 Rs. 2,731 Mn at LIBOR 1.75% interest rate).

(g) Loan and advance in the nature of loan given to Nxtra Data Limited at nil interest rate is Rs. 2,000 Mn (March 31, 2014 Rs. 2,000 Mn at nil interest rate).

(h) Loan and advance in the nature of loan given to Bharti Airtel Services Limited at nil interest rate is Rs. 635 Mn (March 31, 2014 Rs. 635 Mn at nil interest rate).

(i) Loan and advance in the nature of loan given to Airtel Broadband Services Private Limited at nil interest rate is Rs. 5,390 Mn (March 31, 2014 Rs. 49,094 Mn at nil interest rate).

Refer note 48 for outstanding balance at the end of the year for the above entities.

12. Related Party Disclosures

In accordance with the requirements of Accounting Standard (AS) -18 on Related Party Disclosures, the names of the related parties where control exists and/ or with whom transactions have taken place during the year and description of relationships are:

Name of the related party and related party relationship :

(i) Key Management Personnel

Sunil Bharti Mittal

Gopal Vittal

(ii) Other Related Parties

(a) Entities where control exist – Subsidiary/Subsidiaries of subsidiary

Bharti Hexacom Limited

Bharti Airtel Services Limited

Bharti Telemedia Limited

Bharti Airtel (USA) Limited

Bharti Airtel Lanka (Private) Limited

Bharti Airtel (UK) Limited(subsidiary of

Bharti Airtel Holdings (Singapore) Pte Ltd)

Bharti Airtel (Canada) Limited (Under liquidation)

Bharti Airtel (Hongkong) Limited

Bharti Infratel Limited ("BIL")

Bharti Infratel Services Limited

(subsidiary of Bharti Infratel Limited)

Network i2i Limited

Bharti Airtel Holdings (Singapore) Pte Ltd

Bharti Infratel Lanka (Private) Limited (subsidiary of

Bharti Airtel Lanka (Private) Limited)

Airtel M Commerce Services Limited

Airtel Broadband Services Private Limited (w.e.f. June 25, 2013. Amalgamated with Bharti Airtel Limited w.e.f. April 9, 2015)

Nxtra Data Limited

Bharti Airtel (Japan) Kabushiki Kaisha (subsidiary of

Bharti Airtel Holdings (Singapore) Pte Ltd)

Bharti Airtel (France) SAS (subsidiary of Bharti Airtel

Holdings (Singapore) Pte Ltd)

Bharti Airtel International (Mauritius) Limited

Bharti International (Singapore) Pte Ltd

Airtel Bangladesh Limited (subsidiary of Bharti Airtel

Holdings (Singapore) Pte Ltd)

Bharti Airtel International (Netherlands) B.V.

Bangladesh Infratel Networks Limited (subsidiary of Airtel Bangladesh Limited)

Telesonic Networks Limited

Wynk Limited (Incorporated on January 13, 2015)

Wireless Broadband Business Services (Delhi) Private

Limited (w.e.f June 25,2013) *

Wireless Broadband Business Services (Haryana) Private Limited (w.e.f June 25,2013) *

Wireless Broadband Business Services (Kerala) Private

Limited, (w.e.f June 25,2013) *

Other subsidiaries of Bharti Airtel International

(Netherlands) B.V. :

Africa Towers N.V.

Africa Towers Services Limited

Airtel (Ghana) Limited

Airtel (Seychelles) Limited

Airtel (SL) Limited #

Airtel Burkina Faso S.A. #

Airtel Congo S.A #

Airtel DTH Services (Sierra Leone) Limited

(under liquidation)

Airtel DTH Services Congo (RDC) S.p.r.l (under liquidation)

Airtel DTH Services Nigeria Limited (under liquidation)

Airtel DTH Services Tanzania Limited

(liquidated on April 3, 2014)

Airtel Gabon S.A. #

Airtel Madagascar S.A. #

Airtel Malawi Limited #

Airtel Mobile Commerce (SL) Limited

Airtel Mobile Commerce B.V

Airtel Mobile Commerce Burkina Faso S.A.

Airtel Mobile Commerce (Ghana) Limited

Airtel Mobile Commerce Holdings B.V

Airtel Mobile Commerce Kenya Limited

Airtel Mobile Commerce Limited

Airtel Mobile Commerce Madagascar S.A.

Airtel Mobile Commerce Rwanda Limited

Airtel Mobile Commerce (Seychelles) Limited

Airtel Mobile Commerce (Tanzania) Limited

Airtel Mobile Commerce Tchad SARL

Airtel Mobile Commerce Uganda Limited

Airtel Mobile Commerce Zambia Limited

Airtel Money (RDC) S.p.r.l

Airtel Money Niger S.A.

Airtel Money S.A. (Gabon)

Airtel Networks Kenya Limited #

Airtel Networks Limited

Airtel Networks Zambia Plc #

Airtel Rwanda Limited #

Airtel Tanzania Limited #

Airtel Tchad S.A. #

Airtel Towers (Ghana) Limited

Airtel Towers (S.L.) Company Limited

Airtel Uganda Limited #

Bharti Airtel Acquisition Holdings B.V.

(liquidated on March 31, 2015)

Bharti Airtel Africa B.V.

Bharti Airtel Burkina Faso Holdings B.V.

Bharti Airtel Cameroon B.V. (liquidated on March 31, 2015)

Bharti Airtel Chad Holdings B.V.

Bharti Airtel Congo Holdings B.V.

Bharti Airtel Developers Forum Limited

Bharti Airtel DTH Holdings B.V.

Bharti Airtel Gabon Holdings B.V.

Bharti Airtel Ghana Holdings B.V.

Bharti Airtel Kenya B.V.

Bharti Airtel Kenya Holdings B.V.

Bharti Airtel Madagascar Holdings B.V.

Bharti Airtel Malawi Holdings B.V.

Bharti Airtel Mali Holdings B.V.

Bharti Airtel Niger Holdings B.V.

Bharti Airtel Nigeria B.V. #

Bharti Airtel Nigeria Holdings B.V. (under liquidation)

Bharti Airtel Nigeria Holdings II B.V.

Bharti Airtel RDC Holdings B.V.

Bharti Airtel Services B.V.

Bharti Airtel Sierra Leone Holdings B.V. #

Bharti Airtel Tanzania B.V.

Bharti Airtel Uganda Holdings B.V.

Bharti Airtel Zambia Holdings B.V.

Bharti DTH Services Zambia Limited

(Liquidated on November 21, 2014)

Burkia Faso Towers S.A.

Celtel (Mauritius) Holdings Limited

Celtel Congo RDC S.a.r.l. #

Celtel Niger S.A. #

Channel Sea Management Company Mauritius Limited

Congo RDC Towers S.p.r.l.

Congo Towers S.A.

Gabon Towers S.A.

Indian Ocean Telecom Limited

Kenya Towers Limited (held for sale)

Madagascar Towers S.A.

Malawi Towers Limited (held for sale)

Mobile Commerce Congo S.A.

Montana International

MSI-Celtel Nigeria Limited (under liquidation)

Niger Towers S.A.

Partnership Investments Sprl

Rwanda Towers Limited (divested during the year)

Société Malgache de Telephonie Cellulaire SA

Tanzania Towers Limited

Tchad Towers S.A.

Towers Support Nigeria Limited

Uganda Towers Limited (held for sale)

Warid Congo S.A.

Warid Telecom Uganda Limited (merger in process)

Zambian Towers Limited (held for sale)

Zap Trust Company Nigeria Limited

Bharti Airtel Rwanda Holdings Ltd

(formerly known as Zebrano (Mauritius) Limited)

(b) Associates / Associate of subsidiary

Bharti Teleports Limited

Tanzania Telecommunications Company Limited

(Associate of Bharti Airtel Tanzania B.V.)

Seychelles Cable Systems Company Limited

(Associate of Airtel (Seychelles) Limited)

(c) Joint Ventures /Joint Venture of Subsidiary

Forum I Aviation Limited (Joint Venture of Bharti Airtel Services Limited)

Indus Towers Limited (Joint Venture of Bharti Infratel Limited)

Bridge Mobile Pte Limited

FireFly Networks Limited

Wireless Broadband Business Services (Delhi) Private Limited (till June 24, 2013)*

Wireless Broadband Business Services (Haryana) Private Limited (till June 24, 2013)*

Wireless Broadband Business Services (Kerala) Private Limited, (till June 24, 2013)*

Airtel Broadband Services Private Limited (formerly known as Wireless Business Services Private Limited) (till June 24, 2013)*

(d) Entities where Key Management Personnel and their relatives exercise significant influence

Bharti Foundation

Bharti Airtel Employees Welfare Trust

Hike Limited

Mobinteco Limited

Cedar Support Services Limited

(e) Entities having significant influence over the Company

Singapore Telecommunications Limited

Pastel Limited

Bharti Telecom Limited

(f) Group Companies **

Beetel Teletech Limited

Bharti Axa General Insurance Company Limited

Bharti Axa Life Insurance Company Limited

Bharti Realty Holdings Limited

Bharti Realty Limited

Bharti Retail Limited

Bharti Softbank Holdings Pte Limited

BSB Gaming Private Limited

Ignite World Private Limited (formerly known as BSB Portal Limited)

BSB Innovation India Limited

BSY Pte Limited

Centum Learning Limited

Fieldfresh Foods Private Limited

Indian Continent Investment Limited

Jersey Airtel Limited

Mehrauli Realty and Consultants Limited

Nile Tech Limited

Y2CF Digital Media Limited

Bharti Enterprises Limited

Atrium Restaurants India Private Limited

** "Group Companies" though not 'Related Parties' as per the definition under AS 18, have been included by way of a voluntary disclosure, following the best corporate governance practices.

# Transactions of similar nature with such subsidiaries have been clubbed and shown under the head 'Other African Subsidiaries' as their contribution to total transaction value is less than 10%.

- Refer note 38 above for details of new operations during the year.

* Merged w.e.f August 5, 2013 with Airtel Broadband Services Private Limited (formerly known as Wireless Business Services Private Limited)

13. Operating Lease

Operating lease as a lessee

The lease rentals charged during the year for cancellable/non-cancellable leases relating to rent of building premises and cell sites as per the agreements and maximum obligation on long-term non-cancellable operating leases are as follows:

Operating Lease – As a Lessor

i) The Company has entered into non–cancellable lease arrangements to provide dark fiber on indefeasible right of use (IRU) basis and certain premises on lease. Due to the nature of the transaction, it is not possible to compute gross carrying amount, depreciation for the year and accumulated depreciation of the asset given on operating lease as of March 31, 2015 and accordingly, disclosures required by AS 19 are not provided.

14. Employee Stock Compensation

(i) Pursuant to the shareholders' resolutions dated February 27, 2001 and September 25, 2001, the Company introduced the "Bharti Tele-Ventures Employees' Stock Option Plan" (hereinafter called "the Old Scheme") under which the Company decided to grant, from time to time, options to the employees of the Company and its subsidiaries. The grant of options to the employees under the Old Scheme is on the basis of their performance and other eligibility criteria.

(ii) On August 31, 2001 and September 28, 2001, the Company issued a total of 1,440,000 (face value Rs. 10 each) equity shares at a price of Rs. 565 per equity share (2,880,000 equity shares post split of one equity share of Rs. 10 each into 2 equity shares of Rs. 5 each) to the Trust. The Company issued bonus shares in the ratio of 10 equity shares for every one equity share held as at September 30, 2001, as a result of which the total number of shares allotted to the trust increased to 15,840,000 (face value Rs. 10 each) equity shares (31,680,000 equity shares post share split of one equity share of Rs. 10 each into 2 equity shares of Rs. 5 each).

(iii) Pursuant to the shareholders' resolution dated September 6, 2005, the Company announced a new Employee Stock Option Scheme (hereinafter called "the New Scheme") under which the maximum quantum of options was determined at 9,367,276 (face value Rs. 10 each) options to be granted to the employees from time to time on the basis of their performance and other eligibility criteria. (18,734,552 equity shares post share split of one equity share of Rs. 10 each into 2 equity shares of Rs. 5 each)

15. Forward Contracts & Derivative Instruments and Unhedged Foreign Currency Exposure

The Company's activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange contracts, option contracts and interest rate swaps to manage its exposures to foreign exchange fluctuations and changes in interest rate.

The Company has accounted for derivatives, which are covered under the Announcement issued by the ICAI, on marked- to-market basis and has recorded reversal of loss Rs. 258 Mn (including reversal of loss of Rs. 196 Mn towards embedded derivatives) for the year ended March 31, 2015 [recorded net loss of Rs. 73 Mn (including reversal of loss of Rs. 8 Mn towards embedded derivatives) for the year ended March 31, 2014].

16. a) The Board of Directors, in its meeting held on April 29, 2014, proposed a final dividend of Rs. 1.80 per equity share of Rs. 5.00 each (36% of face value) for financial year 2013-14 which was duly approved by the shareholders of the Company in the Annual General Meeting held on September 5, 2014.

b) During the year ended March 31, 2015, on August 13, 2014, the Board of Directors declared an interim dividend for Rs. 1.63 per equity of Rs. 5.00 (32.6% of face value)

c) Net dividend remitted in foreign exchange:

d) Dividend of Rs. 2.22 per share (Face value per share Rs. 5) proposed for the year 2014-15.

17. Movement in Provision

a) Doubtful Debts/Advances

b) Subjudice Matters

The Company is involved in various litigations, the outcomes of which are considered probable, and in respect of which the company has made aggregate provisions of Rs. 55,205 Mn as at March 31, 2015 (March 31, 2014 Rs. 42,296 Mn).

The movement of provision towards subjudice matters disclosed under other non-current assets (refer note 19) and other current liabilities (refer note 13)

18. Details of debt covenant w.r.t. the Company's 3G/BWA borrowings:

The loan agreements with respect to 3G/BWA borrowings contains a negative pledge covenant that prevents the Company to create or allow to exit any security interest on any of its assets without prior written consent of the lenders except in certain agreed circumstances. (refer note 4)

19. During the year ended March 31, 2014, the Company has transferred co-ownership of three undersea cables having net WDV of Rs. 2,725 Mn to its wholly owned subsidiary Network i2i Limited, a company incorporated and existing under the laws of Mauritius, with the intention to aggregate certain international undersea cables under a single entity.

20. The Company has completed an independent evaluation for all international and domestic transactions for the year ended March 31, 2015 to determine whether the transactions with associated enterprises are undertaken at "arm's length price". Based on the internal and external transfer pricing review and validation, the Company believes that all transactions with associate enterprises are undertaken on the basis of arm's length principle.

21. The Company (M/s J T Mobiles Limited subsequently merged with the Company) was awarded license by DoT to operate cellular services in the state of Punjab in December 1995. On April 18, 1996, the Company obtained the permission from DoT to operate the Punjab license through its wholly owned subsidiary, Evergrowth Telecom Limited (ETL). In December 1996, DoT raised argument that the permission dated April 18, 1996 has not become effective and cancelled the permission to operate, which was subsequently reinstated on March 10, 1998 (the period from April 18, 1996 to March 10, 1998 has been hereinafter referred to as 'blackout period'). On July 15, 1999, license was terminated due to alleged non-payment of license fees, liquidated damages and related penal interest relating to blackout period.

In September 2001, in response to the demand raised by DoT, the Company had paid Rs. 4,856 Mn to DoT under protest subject to resolution of the dispute through arbitration. Consequently, the license was restored and an arbitrator was appointed for settlement of the dispute. Arbitrator awarded an unfavourable order, which was challenged by the Company before Hon'ble Delhi High Court.

On September 14, 2012, Hon'ble Delhi High court passed an order setting aside the award passed by the arbitrator. DoT in the meanwhile has preferred an Appeal, including condonation of delay in filing of appeal, which is presently pending before the Division Bench of the Delhi High Court. The Appeal of DoT on the issue of condonation of delay was allowed on July 16, 2013. However, the Company on October 30, 2013 has filed the writ Petition for recovery of License fee in Delhi High Court, notice issued by HC and listed for hearing on May 6, 2015.

22. Previous year figures have been regrouped / reclassified where necessary to conform to current year's classification.


Mar 31, 2014

1. Capital and Other Commitments

a) Estimated amount of contracts to be executed on capital account and not provided for (net of advances) Rs. 159,239 Mn as of March 31, 2014 (March 31, 2013 - Rs. 17,041 Mn). (refer note 38(vi))

b) Under certain Outsourcing Agreements, the Company has estimated commitments to pay Rs. 311 Mn as of March 31, 2014 (March 31, 2013 - Rs. 8,245 Mn) comprising of assets and service charges. The amount represents total minimum commitment over the unexpired period of the contracts (uptill 5 years from the reporting date), since it is not possible for the Company to determine the extent of assets and services to be provided over the unexpired period of the contract. However, the actual charges/ payments may exceed the above mentioned minimum commitment based on the terms of contract.

2. The Company has undertaken to provide financial support, to its subsidiaries, namely, Bharti Airtel Services Limited, Bharti Airtel (USA) Limited, Bharti Airtel (Hongkong) Limited, Bharti Airtel (Japan) Limited, Bharti Airtel (France) Limited, Bharti Telemedia Limited, Airtel M Commerce Services Limited, Telesonic Networks Limited, Bharti International (Singapore) Pte Limited, Bharti Airtel Holdings (Singapore) Pte Limited, Bharti Airtel International (Netherlands) B.V. including its subsidiaries.

3. Exceptional Items

a) During the year ended March 31, 2014, the Company has reassessed useful life of certain categories of network assets due to technological developments and has revised the remaining useful life in respect of those assets effective April 1, 2013. Out of those assets, additional depreciation charge of Rs. 2,071 Mn (March 31, 2013- Rs. Nil) on assets for which the revised useful life has expired on April 1, 2013 has been recognised and disclosed as ''Exceptional Items'' and additional depreciation charge of Rs. 2,708 Mn (March 31, 2013- Rs. Nil) for balance assets has been recognised and reflected as ''Depreciation and amortisation expense'' for the year ended March 31, 2014.

b) Tax expense includes:

i) Tax benefit of Rs. 540 Mn (March 31, 2013 - Rs. Nil) on above

ii) Reversal of tax provision of Rs. 640 Mn (March 31, 2013 - Rs. Nil) on account of settlement of an uncertain tax position

4. Preferential Allotment

During the year ended March 31, 2014, the Company has issued 199,870,006 equity shares to M/s. Three Pillars Pte. Ltd (belonging to non-promoter category), an affiliate of Qatar Foundation Endowment, constituting 5% of the post issue share capital of the Company, through preferential allotment at a price of Rs. 340 per share aggregating to Rs. 67,956 Mn. The proceeds of the preferential allotment were utilised towards the repayment of equivalent debt in accordance with the objective of the preferential allotment.

5. Acquisitions/Additional investments / New developments

(i) On June 25, 2013, the Company acquired additional equity stake of 2% by way of subscription to fresh equity in its existing 49% owned joint venture companies, namely, Airtel Broadband Services Private Limited (''ABSPL'') (formerly known as Wireless Business Services Private Limited), Wireless Broadband Business Services (Delhi) Private Limited, Wireless Broadband Business Services (Kerala) Private Limited and Wireless

Broadband Business Services (Haryana) Private Limited (together referred as "BWA entities"), for a sum of Rs. 638 Mn, thereby increasing its equity shareholding to 51% in each of these entities.

The Scheme of Arrangement (''Scheme'') under Section 391 to 394 of the Companies Act, 1956 for amalgamation of Wireless Broadband Business Services (Delhi) Private Limited, Wireless Broadband Business Services (Kerala) Private Limited and Wireless Broadband Business Services (Haryana) Private Limited (collectively referred to as "the transferor companies") with ABSPL was approved by the Hon''ble High Courts of Delhi and Bombay vide order dated May 24, 2013 and June 28, 2013, respectively, with appointed date July 6, 2010, and filed with the Registrar of Companies on August 5, 2013, effective date of the Scheme. Accordingly, the transferor companies have ceased to exist and have merged into ABSPL. The shares issued to the Company in ABSPL in exchange of shares in transferor companies have been accounted for at the carrying amount of investment in the transferor companies.

On August 30, 2013, the Company increased its equity investment in ABSPL by way of conversion of loan of Rs. 49,094 Mn, thereby increasing its shareholding from 51% to 93.45% and on October 17, 2013 further acquired 371,273,844 equity shares of ABSPL for a total consideration of Rs. 6,257 Mn from Qualcomm Asia Pacific Pte. Ltd., the only other shareholder of ABSPL, thereby increasing it''s shareholding to 100%. An amount of Rs. 4,104 Mn is payable upon satisfaction of certain conditions as per the share purchase agreement.

The Scheme of Arrangements ("Scheme'') under Sections 391 to 394 of the Companies Act, 1956 for amalgamation of ABSPL, a wholly-owned subsidiary of the Company, with the Company, was approved by the Hon''ble High Courts of Delhi and Bombay on January 21, 2014 and April 11, 2014, respectively. The Scheme shall be effective on filing of certified copies of Orders of Hon''ble High Courts of Bombay and Delhi with the Registrar of Companies (ROC) and obtaining of any other regulatory approval. The said orders are yet to be filed with ROC. Accordingly, the Scheme has not been given effect to in these financial statements.

(ii) During the year ended March 31, 2014, the Company has made equity investment of Rs. 9,518 Mn (USD 155 Mn) in Bharti Airtel International (Mauritius) Limited.

(iii) During the year ended March 31, 2014, the Company has made equity investment of Rs. 990 Mn in Airtel M Commerce Services Limited.

(iv) During the year ended March 31, 2014, the Company has made equity investment of Rs. 51 Mn in Nxtra Data Limited (a wholly owned subsidiary company). Pursuant to the approval of the shareholders through Postal Ballot on September 30, 2013, the Company has transferred the Data Center and Managed Services undertaking as a going concern on a slump sale basis to Nxtra Data Limited, w.e.f. January 1, 2014 for a consideration of Rs. 1,771 Mn.

(v) During the year ended March 31, 2014, the Company has made equity investment of Rs. 2,609 Mn (USD 43 Mn) in Network i2i Limited by way of transfer of its co- ownership interest in three of its undersea cables to Network i2i Limited (refer note 55).

(vi) During the year ended March 31, 2014, the Company has won the auction for 99.80 MHz spectrum in 13 service areas in the auction conducted by the Government of India. The Company has opted for the deferred payment option and has paid an advance of Rs. 53,304 Mn with the balance amount of Rs. 129,129 Mn payable in 10 equal installments after a moratorium of two years. Pending the allocation of spectrum by the Government of India, the balance amount has been disclosed under capital commitments. (refer note 27)

6. Investment in Joint Ventures/Jointly Owned Assets

b) Joint Ventures Entity

(i) The Company has a Joint Venture with 9 other overseas mobile operators to form a regional alliance called the Bridge Mobile Alliance, incorporated in Singapore as Bridge Mobile Pte Limited. The principal activity of the venture is creating and developing regional mobile services and managing the Bridge Mobile Alliance Programme. The Company has invested USD 2.2 Mn, amounting to Rs. 92 Mn, in 2.2 Mn ordinary shares of USD 1 each which is equivalent to an ownership interest of 10.00% as of March 31, 2014 (March 31, 2013 USD 2.2 Mn, Rs. 92 Mn, ownership interest 10.00%).

(ii) During the year ended March 31, 2013, the Company acquired 49% stake for a consideration of Rs. 9,281 Mn (USD 165 Mn) in Qualcomm Asia Pacific''s 4 Indian Subsidiaries ("BWA entities"). The principal activity of the venture is to carry on the business of internet and broadband services. During the year ended March 31, 2014, the Company has increased its equity investment in Airtel Broadband Services Private Limited (ABSPL) from 49% to 100% and ABSPL became the wholly owned subsidiary of the Company (refer note 38).

7. Loans and advances in the nature of loan along with maximum amount outstanding during the year as per Clause 32 of the Listing Agreement are as follows:

(a) Loan and advance in the nature of loan given to Bharti Telemedia Limited at nil interest rate is Rs. 35,770 Mn (March 31, 2013 Rs. 35,026 Mn at nil interest rate).

(b) Loan and advance in the nature of loan given to Bharti Airtel Lanka (Private) Limited at nil interest rate is Rs. 11,047 Mn (March 31, 2013 Rs. 11,047 Mn at nil interest rate).

(c) Loan and advance in the nature of loan given to Bharti Airtel International (Netherlands) B.V at LIBOR 1.75% interest rate is Rs. 10,895 Mn (March 31, 2013 Rs. 67,757 Mn at LIBOR 1.7% interest rate).

(d) Loan and advance in the nature of loan given to Telesonic Networks Limited at SBI PLR 1% interest rate is Rs. 90 Mn (March 31, 2013 Rs. 90 Mn at SBI PLR 1% interest rate).

(e) Loan and advance in the nature of loan given to Bharti Teleports Limited at SBI 1% interest rate is Rs. 412 Mn (March 31, 2013 Rs. 302 Mn at SBI 1% interest rate).

(f) Loan and advance in the nature of loan given to Bharti Airtel International (Mauritius) Limited is Rs. Nil (March 31, 2013 Rs. 9,967 Mn at LIBOR 1.7% interest rate).

(g) Loan and advance in the nature of loan given to Bharti International (Singapore) Pte Limited at LIBOR 1.75% interest rate is Rs. 2,731 Mn (March 31, 2013 Rs. 32,378 Mn at LIBOR 1.7% interest rate).

(h) Loan and advance in the nature of loan given to Bharti Airtel (USA) Limited is Rs. Nil (March 31, 2013 Rs. 53 Mn at 7.33% p.a. interest rate).

(i) Loan and advance in the nature of loan given to Nxtra Data Limited at nil interest rate is Rs. 2,000 Mn (March 31, 2013 Rs. Nil).

(j) Loan and advance in the nature of loan given to Bharti

Airtel Services Limited at nil interest rate is Rs. 635 Mn (March 31, 2013 Rs. 56 Mn at nil interest rate).

(k) Loan and advance in the nature of loan given to Airtel Broadband Services Private Limited at nil interest rate is Rs. 49,094 Mn (March 31, 2013 Rs. Nil).

Refer note 48 for outstanding balance at the end of the year for the above entities.

48. Related Party Disclosures

In accordance with the requirements of Accounting Standard (AS) -18 on Related Party Disclosures, the names of the related parties where control exists and/or with whom transactions have taken place during the year and description of relationships are:

Name of the related party and related party relationship :

(i) Key Management Personnel

Sunil Bharti Mittal

Manoj Kohli

Gopal Vittal (w.e.f. February 1, 2013)

Sanjay Kapoor (till February 28, 2013)

(ii) Other Related Parties

(a) Entities where control exist – Subsidiary/Subsidiaries of subsidiary

Bharti Hexacom Limited Bharti Airtel Services Limited Bharti Telemedia Limited Bharti Airtel (USA) Limited Bharti Airtel Lanka (Private) Limited Bharti Airtel (UK) Limited Bharti Airtel (Canada) Limited ^

Bharti Airtel (Hongkong) Limited

Bharti Infratel Limited ("BIL")

Bharti Infratel Services Limited (incorporated on June

4, 2013 as subsidiary of BIL)

Network i2i Limited

Bharti Airtel Holdings (Singapore) Pte Ltd

Bharti Infratel Lanka (Private) Limited (subsidiary of

Bharti Airtel Lanka (Private) Limited)

Bharti Infratel Ventures Limited ("BIVL") (subsidiary of BIL) (w.e.f June 11, 2013, merged with Indus Towers Limited)

Airtel M Commerce Services Limited

Airtel Broadband Services Private Limited (formerly known as Wireless Business Services Private Limited) (subsidiary w.e.f. June 25, 2013)* Wireless Broadband Business Services (Delhi) Private Limited (subsidiary w.e.f. June 25, 2013)*$ Wireless Broadband Business Services (Haryana) Private Limited (subsidiary w.e.f. June 25, 2013)*$ Wireless Broadband Business Services (Kerala) Private Limited (subsidiary w.e.f. June 25, 2013)*$ Nxtra Data Limited (incorporated on July 2, 2013)* Bharti Airtel (Japan) Kabushiki Kaisha (subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd)

Bharti Airtel (France) SAS (subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd) Bharti Airtel International (Mauritius) Limited Bharti International (Singapore) Pte Ltd

Airtel Bangladesh Limited (subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd)

Bharti Airtel International (Netherlands) B.V. Bangladesh Infratel Networks Limited (subsidiary of Airtel Bangladesh Limited)

Bharti Airtel Africa B.V. (subsidiary of Bharti Airtel International (Netherlands) B.V.)

Telesonic Networks Limited (formerly known as Alcatel-Lucent Network Management Services India Limited) (effective February 5, 2013)

Other subsidiaries of Bharti Airtel International (Netherlands) B.V. :

Africa Towers N.V.

Africa Towers Services Limited

Airtel Ghana Limited

Airtel (SL) Limited #

Airtel Burkina Faso S.A. #

Airtel Congo S.A #

Airtel DTH Services (SL) Limited ^

Airtel DTH Services Burkina Faso S.A. @

Airtel DTH Services Congo (RDC) S.p.r.l ^

Airtel DTH Services Congo S.A. @

Airtel DTH Services Gabon S.A @

Airtel DTH Services Ghana Limited @

Airtel DTH Services Nigeria Limited

Airtel DTH Services Tanzania Limited ^

Airtel DTH Services Uganda Limited @

Bharti DTH Services Zambia Limited ^

Airtel Madagascar S.A.#

Airtel Malawi Limited #

Airtel Mobile Commerce (SL) Limited

Airtel Mobile Commerce B.V.

Airtel Mobile Commerce Burkina Faso S.A.

Airtel Mobile Commerce (Ghana) Limited

Airtel Mobile Commerce Holdings B.V.

Airtel Mobile Commerce Madagascar S.A.

Airtel Mobile Commerce Limited

Airtel Mobile Commerce (Tanzania) Limited

Airtel Mobile Commerce Tchad S.a.r.l.

Airtel Mobile Commerce Uganda Limited

Airtel Mobile Commerce Rwanda Limited

Airtel Mobile Commerce (Seychelles) Limited (subsidiary w.e.f. August 9, 2013)

Airtel Mobile Commerce (Kenya) Limited

Airtel Money Niger S.A.

Airtel Money (RDC) S.p.r.l

Airtel Networks Kenya Limited #

Airtel Networks Limited

Airtel Rwanda Limited #

Airtel Tanzania Limited #

Airtel Towers (Ghana) Limited

Airtel Towers (SL) Company Limited

Airtel Uganda Limited #

Airtel (Seychelles) Limited

Bharti Airtel Acquisition Holdings B.V.

Bharti Airtel Burkina Faso Holdings B.V.

Bharti Airtel Cameroon B.V.

Bharti Airtel Chad Holdings B.V.

Bharti Airtel Congo Holdings B.V.

Bharti Airtel Developers Forum Limited

Bharti Airtel DTH Holdings B.V.

Bharti Airtel Gabon Holdings B.V.

Bharti Airtel Ghana Holdings B.V.

Bharti Airtel Kenya B.V.

Bharti Airtel Kenya Holdings B.V.

Bharti Airtel Madagascar Holdings B.V.

Bharti Airtel Malawi Holdings B.V.

Bharti Airtel Mali Holdings B.V.

Bharti Airtel Niger Holdings B.V.

Bharti Airtel Nigeria B.V.

Bharti Airtel Nigeria Holdings B.V. ^

Bharti Airtel Nigeria Holdings II B.V.

Bharti Airtel RDC Holdings B.V.

Bharti Airtel Services B.V.

Bharti Airtel Sierra Leone Holdings B.V.

Bharti Airtel Tanzania B.V.

Bharti Airtel Uganda Holdings B.V.

Bharti Airtel Zambia Holdings B.V.

Burkina Faso Towers S.A.

Celtel (Mauritius) Holdings Limited

Celtel Congo (RDC) S.a.r.l. #

Airtel Gabon S.A.#

Celtel Niger S.A.#

Airtel Tchad S.A.#

Airtel Networks Zambia Plc (formerly known as Celtel

Zambia plc)#

Channel Sea Management Company (Mauritius) Limited

Congo (RDC) Towers S.p.r.l.

Congo Towers S.A.

Gabon Towers S.A.

Indian Ocean Telecom Limited

Kenya Towers Limited

Madagascar Towers S.A.

Malawi Towers Limited

Mobile Commerce Congo S.A.

Airtel Money S.A. (Gabon)

Montana International

MSI-Celtel Nigeria Limited ^

Niger Towers S.A.

Partnership Investments S.p.r.l.

Rwanda Towers Limited

Société Malgache de Telephonie Cellulaire SA

Tanzania Towers Limited

Tchad Towers S.A.

Towers Support Nigeria Limited

Uganda Towers Limited

Warid Congo S.A. (subsidiary w.e.f. March 12, 2014)

Warid Telecom Uganda Limited (subsidiary w.e.f. May

13, 2013) (merged with Airtel Uganda Limited w.e.f.

February 1, 2014)

Zambian Towers Limited

Zap Trust Company Nigeria Limited

Zebrano (Mauritius) Limited

Airtel Mobile Commerce Zambia Limited (formerly

known as ZMP Limited)

(b) Associates / Associate of subsidiary Bharti Teleports Limited

Tanzania Telecommunications Company Limited

(Associate of Bharti Airtel Tanzania B.V.)

Seychelles Cable Systems Company Limited (Associate

of Airtel (Seychelles) Limited)

Telesonic Networks Limited (formerly known as

Alcatel-Lucent Network Management Services India

Limited) (till February 4, 2013)

(c) Joint Ventures /Joint Venture of Subsidiary Forum I Aviation Limited (Joint Venuture of Bharti Airtel Services Limited)

Indus Towers Limited (Joint Venture of Bharti Infratel Limited)

Bridge Mobile Pte Limited

Wireless Broadband Business Services (Delhi) Private

Limited (till June 24, 2013)*

Wireless Broadband Business Services (Haryana)

Private Limited (till June 24, 2013)*

Wireless Broadband Business Services (Kerala) Private

Limited, (till June 24, 2013)*

Airtel Broadband Services Private Limited (formerly

known as Wireless Business Services Private Limited)

(till June 24, 2013)*

(d) Entities where Key Management Personnel and their relatives exercise significant influence /Group Companies

Beetel Teletech Limited

Bharti Airtel Employees Welfare Trust

Bharti AXA General Insurance Company Limited

Bharti AXA Life Insurance Company Limited

Bharti Enterprises Limited

Bharti Foundation

Bharti Realty Holdings Limited

Bharti Realty Limited

Bharti Retail Limited

Bharti Wal-Mart Private Limited (till December 28,

2013)

BSB Portal Limited

Centum Learning Limited

Comviva Technologies Limited (till December 13, 2012)

Fieldfresh Foods Private Limited

Indian Continent Investment Limited

Jersey Airtel Limited

Nile Tech Limited

Mehrauli Realty and Consultants Limited

Mobinteco Limited

Y2CF Digital Media Limited (w.e.f May 6, 2013)

Hike Limited (formerly known as MessngrCo Private Limited)

(e) Entities having significant influence over the Company Singapore Telecommunications Limited

Pastel Limited

Bharti Telecom Limited

* Refer note 38 above for details of new operations during the year.

# Transactions of similar nature with such subsidiaries have been clubbed and shown under the head ''Other African Subsidiaries'' as their contribution to total transaction value is less than 10%.

@ Dissolved during the year ended March 31, 2014

^ Under Liquidation. Airtel DTH Services Tanzania Limited liquidated on 3rd April 2014.

$ Merged w.e.f. August 5, 2013 with Airtel Broadband Services Private Limited (formerly known as Wireless Business Services Private Limited)

8. Employee Stock Compensation

(i) Pursuant to the shareholders'' resolutions dated February 27, 2001 and September 25, 2001, the Company introduced the "Bharti Tele-Ventures Employees'' Stock Option Plan" (hereinafter called "the Old Scheme") under which the Company decided to grant, from time to time, options to the employees of the Company and its subsidiaries. The grant of options to the employees under the Old Scheme is on the basis of their performance and other eligibility criteria.

(ii) On August 31, 2001 and September 28, 2001, the Company issued a total of 1,440,000 (face value Rs. 10 each) equity shares at a price of Rs. 565 per equity share ( 2,880,000 equity shares post split of one equity share of Rs. 10 each into 2 equity shares of Rs. 5 each) to the Trust. The Company issued bonus shares in the ratio of 10 equity shares for every one equity share held as at September 30, 2001, as a result of which the total number of shares allotted to the trust increased to 15,840,000 (face value Rs. 10 each) equity shares (31,680,000 equity shares post share split of one equity share of Rs. 10 each into 2 equity shares of Rs. 5 each).

(iii) Pursuant to the shareholders'' resolution dated September 6, 2005, the Company announced a new Employee Stock Option Scheme (hereinafter called "the New Scheme") under which the maximum quantum of options was determined at 9,367,276 (face value Rs. 10 each) options to be granted to the employees from time to time on the basis of their performance and other eligibility criteria. (18,734,552 equity shares post share split of one equity share of Rs. 10 each into 2 equity shares of Rs. 5 each)

9. Forward Contracts & Derivative Instruments and Unhedged Foreign Currency Exposure

The Company''s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange contracts, option contracts and interest rate swaps to manage its exposures to foreign exchange fluctuations and changes in interest rate.

10. a) The Board of Directors, in its meeting held on May 2, 2013, proposed a final dividend of Rs. 1.00 per equity share of Rs. 5.00 each (20% of face value) for financial year 2012-13, which was duly approved by the shareholders of the Company in the Annual General Meeting held on September 5, 2013.

11. Details of debt covenant w.r.t. the Company''s 3G/BWA borrowings:

The loan agreements with respect to 3G/BWA borrowings contains a negative pledge covenant that prevents the Company to create or allow to exist any security interest on any of its assets without prior written consent of the lenders except in certain agreed circumstances.

12. During the year ended March 31, 2014, the Company has transferred co-ownership of three undersea cables having net WDV of Rs. 2,725 Mn (March 31, 2013 – Rs. Nil) to its wholly owned subsidiary Network i2i Limited, a company incorporated and existing under the laws of Mauritius, with the intention to aggregate certain international undersea cables under a single entity (refer note 38(v)).

13. The Company has completed an independent evaluation for all international and domestic transactions for the year ended March 31, 2013 and has reviewed the same for the year ended March 31, 2014 to determine whether the transactions with associated enterprises are undertaken at "arm''s length price". Based on the internal and external transfer pricing review and validation, the Company believes that all transactions with associate enterprises are undertaken on the basis of arm''s length principle.

14. The Company (M/s J T Mobiles Limited subsequently merged with the Company) was awarded license by DoT to operate cellular services in the state of Punjab in December 1995. On April 18, 1996, the Company obtained the permission from DoT to operate the Punjab license through its wholly owned subsidiary, Evergrowth Telecom Limited (ETL). In December 1996, DoT raised argument that the permission dated April 18, 1996 has not become effective and cancelled the permission to operate, which was subsequently reinstated on March 10, 1998 (the period from April 18, 1996 to March 10, 1998 has been hereinafter referred to as ''blackout period''). On July 15, 1999, license was terminated due to alleged non-payment of license fees, liquidated damages and related penal interest relating to blackout period.

In September 2001, in response to the demand raised by DoT, the Company had paid Rs. 4,856 Mn to DoT under protest subject to resolution of the dispute through arbitration. Consequently, the license was restored and an arbitrator was appointed for settlement of the dispute. Arbitrator awarded an unfavourable order, which was challenged by the Company before Hon''ble Delhi High Court.

On September 14, 2012, Hon''ble Delhi High court passed an order setting aside the award passed by the arbitrator. DoT in the meanwhile has preferred an Appeal, including condonation of delay in filing of appeal, which is presently pending before the Division Bench of the Delhi High Court. The Appeal of DoT on the issue of condonation of delay was allowed on July 16, 2013. The next date of hearing is fixed on May 9, 2014. However, the Company on October 30, 2013 has filed the writ Petition for recovery of License fee in Delhi High Court, notice issued by HC and listed for July 26, 2014.

Further to the development during the year ended March 31, 2014, the Company is in the process of evaluating legal course of action for recovery of the amount paid under protest together with interest thereon. Pending such evaluation and thereby initiation of recovery process, the Company, based on independent legal opinion, has not given any accounting treatment for the impact of the judgement in the financial statements for the year ended March 31, 2014.

15. Previous year figures have been regrouped / reclassified where necessary to conform to current year''s classification.


Mar 31, 2013

1. Corporate Information

Bharti Airtel Limited (''the Company'') incorporated in India on July 7, 1995, is a company promoted by Bharti Telecom Limited (''BTL''), a company incorporated under the laws of India. The Company''s shares are publicly traded on the National Stock Exchange (''NSE'') and the Bombay Stock Exchange (''BSE''), India. The Registered office of the Company is situated at Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase - II, New Delhi - 110070.

The Company is a leading telecommunication service provider in India providing telecommunication systems and services.

2. Basis of Preparation

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The financial statements have been prepared to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (''as amended'') and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention and on an accrual basis except in case of assets for which revaluation is carried out and certain derivative financial instruments (Refer note 3.13). The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

These financial statements are presented in Indian Rupees ("Rupees'' or T) and all amount are rounded to the nearest Mn, except as stated otherwise.

3. Information about Business Segments-Primary Segment Definitions:

The Company''s operating businesses are organised and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

Effective April 1, 2012, in line with the changes in the internal reporting, the Broadband Wireless Access (BWA) services reported earlier under "Telemedia Services" , is now reported as part of "Mobile Services". Accordingly, previous year''s segment figures have been regrouped/rearranged.

Mobile Services - These services cover voice and data telecom services provided through wireless technology in India (2G/3G/4G). This includes the captive national long distance networks which primarily provide connectivity to the mobile services business in India

Telemedia Services - These services cover voice and data communications based on fixed network and broadband technology.

Airtel Business - These services cover end-to-end telecom solutions being provided to large Indian and global corporations by serving as a single point of contact for all telecommunication needs across data and voice (domestic as well as international long distance), network integration and managed services.

4. Contingent Liabilities

(i) Total Guarantees outstanding as of March 31, 2013 amounting to Rs. 29,714 Mn (March 31, 2012 - Rs. 27,158 Mn) have been issued by banks and financial institutions on behalf of the Company. These guarantees include of certain financial bank guarantees which have been given for subjidice matters and in compliance with licensing conditions, the amount with respect to these have been disclosed under contingencies and liabilities, as applicable in compliance with the applicable Accounting standards.

Corporate Guarantees outstanding as of March 31, 2013 amounting to Rs. 537,606 Mn (March 31, 2012 - Rs. 481,376 Mn) have been given to banks, financial institutions and third parties on behalf of Group Companies at no cost to the latter.

(ii) Claims against the Company not acknowledged as debt: (Excluding cases where the possibility of any outflow in settlement is remote):

a) Claims against the Company not acknowledged as debt

b) Sales Tax

The cLaims for saLes tax as of March 31, 2013 comprised the cases reLating to:

i. the appropriateness of the declarations made by the Company under the reLevant saLes tax Legislations which was primarily procedural in nature;

ii. the appLicabLe saLes tax on disposals of certain property and equipment items;

iii. Lease circuit/broadband connectivity services;

iv. the appLicabiLity of saLes tax on saLe of SIM cards, SIM replacements, VAS, Handsets and Modem rentaLs;

v. In the State of J&K, the Company has disputed the Levy of GeneraL SaLes Tax on its teLecom services and towards which the Company has received a stay from the Hon''bLe J&K High Court. The demands received to date have been discLosed under contingent Liabilities. Based on the Company''s evaluation, it beLieves that it is not probabLe that the cLaim wiLL materialise and therefore, no provision has been recognised.

c) Service Tax

The service tax demands as of March 31, 2013 reLate to:

i. cenvat cLaimed on tower and reLated materiaL,

ii. Levy of service tax on SIM cards,

iii. cenvat credit disaLLowed for proceduraL Lapses and inadmissibiLity of credit and

iv. disaLLowance of cenvat credit used in excess of 20% Limit.

v. empLoyee taLk time

d) Income Tax

Income tax demands under appeaL mainLy incLuded the appeaLs fiLed by the Company before various appeLLate authorities against the disaLLowance of certain expenses being cLaimed under tax by income tax authorities, non-deduction of tax at source with respect to deaLers/ distributor''s margin and non-deduction of tax on payments to international operators for access charges, etc. Based on the Company''s evaluation and LegaL advice, it beLieves that it is not probabLe that the cLaim wiLL materialise and therefore, no provision has been recognised.

e) Custom Duty

The custom authorities, in some states, demanded Rs. 4,463 Mn as of March 31, 2013 (March 31, 2012 - Rs. 2,198 Mn) for the imports of special software on the ground that this would form part of the hardware on which it was pre-loaded at the time of import. The view of the Company is that such imports should not be subject to any custom duty as it would be an operating software exempt from any custom duty. In response to the application filed by the Company, the Hon''ble CESAT has passed an order in favour of the custom authorities. The Company has filed an appeal with Hon''ble Supreme Court against the CESTAT order. Based on the Company''s evaluation, it believes that it is not probable that the claim will materialise and therefore, no provision has been recognised.

f) Entry Tax

In certain states an entry tax is levied on receipt of material from outside the state. This position has been challenged by the Company in the respective states, on the grounds that the specific entry tax is ultra vires the Constitution. Classification issues have also been raised whereby, in view of the Company, the material proposed to be taxed is not covered under the specific category. The amount under dispute as of March 31, 2013 was Rs. 3,408 Mn (March 31, 2012 - Rs. 2,624 Mn).

g) Access Charges (Interconnect Usage Charges)/Port Charges

Interconnect charges are based on the Interconnect Usage Charges (IUC) agreements between the operators although the IUC rates are governed by the IUC guidelines issued by TRAI. BSNL has raised a demand requiring the Company to pay the interconnect charges at the rates contrary to the regulations issued by TRAI. The Company filed a petition against that demand with the Telecom Disputes Settlement and Appellate Tribunal (''TDSAT'') which passed a status quo order, stating that only the admitted amounts based on the regulations would need to be paid by the Company. The final order was also passed in our favour. BSNL has challenged the same in Supreme court. However, no stay has been granted.

The management believes that, based on legal advice, the outcome of these contingencies will be favorable and that a loss is not probable. Accordingly, no amounts have been accrued although some have been paid under protest.

In another proceeding with respect to Distance Based Carriage Charges, the Hon''ble TDSAT in its order dated May 21, 2010, allowed BSNL appeal praying to recover distance based carriage charges. On filing of appeal by the Telecom Operators, Hon''ble Supreme Court asked the Telecom Operators to furnish details of distance- based carriage charges owed by them to BSNL. Further, in a subsequent hearing held on Aug 30, 2010 Hon''ble Supreme Court sought the quantum of amount in dispute from all the operators as well as BSNL and directed both BSNL and Private telecom operators to furnish CDRs to TRAI. The CDRs have been furnished to TRAI. The management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable.

In another issue with respect to Port Charges, in 2001, TRAI had prescribed slab based rate of port charges payable by private operators which were subsequently reduced in the year 2007 by TRAI. On BSNL''s appeal, TDSAT passed it''s judgment in favour of BSNL, and held that the pre-2007 rates shall be applicable prospectively from May 29, 2010. The management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable.

h) DoT Demands

i) The Company has not been able to meet its roll out obligations fully due to certain non-controllable factors like Telecommunication Engineering Center testing, Standing Advisory Committee of Radio Frequency Allocations clearance, non availability of spectrum, etc. The Company has received show cause notices from DoT for 14 of its circles for non-fulfillment of its roll out obligations and these have been replied to. DoT has reviewed and revised the criteria and there has been no further development on this matter since then.

ii) DoT demands include demands raised for contentious matters relating to computation of license fees and spectrum charges.

iii) DoT demands include alleged short payment of license fee for FY 2006-07 and FY 2007-08 due to difference of interpretation of Adjusted Gross Revenue (AGR) between the Company and DoT and interest thereon, against which the Company has obtained stay from appropriate Hon''ble High Court.

iv) DoT demands also include the contentious matters in respect of subscriber verification norms and regulations including validity of certain documents allowed as Proof of Address/Identity in a mobility circle.

The above stated matters are being contested by the Company and the Company, based on legal advice, believes that it has complied with all license related regulations as and when prescribed and does not expect any loss relating to these matters.

In addition to the amount disclosed in the above table, the contingent liability on DOT matters includes the following:

v) Post the Hon''ble Supreme Court Judgment on October 11, 2011 on components of Adjusted Gross Revenue for computation of License fee, based on the legal advice, the Company believes that the realised and unrealised foreign exchange gain should not be included in Adjusted Gross Revenue (AGR) for computation of license fee thereon. Accordingly, the license fee on such foreign exchange gain has not been provided in these financial statements. Also, due to ambiguity of interpretation of ''foreign exchange differences, the license fee impact on such exchange differences is not quantifiable and has not been included in the table above. Further, as per the Order dated June 18, 2012 of the Kerala High Court, stay has been obtained, wherein the licensee can continue making the payment as was being done throughout the period of license on telecom activities.

vi) On January 8, 2013, the Department of Telecommunications (''DoT'') issued a demand on the Company for Rs. 51,353 Mn towards levy of one time spectrum charge. The demand includes a retrospective charge of Rs. 8,940 Mn for holding GSM Spectrum beyond 6.2 Mhz for the period from July 1, 2008 to December 31, 2012 and also a prospective charge of Rs. 42,413 Mn for GSM spectrum held beyond 4.4 Mhz for the period from January 1, 2013, till the expiry of the initial terms of the respective licenses. In the opinion of the Company, inter-alia, the above demand amounts to alteration of financial terms of the licenses issued in the past. Based on a petition filed by the Company, the Hon''ble High Court of Bombay, through its order dated January 28, 2013, has directed the DoT to respond and not to take any coercive action until the next date of hearing, scheduled for May 6, 2013. The Company believes, based on independent legal opinions and its evaluation, that it is not probable that the claim will materialise and therefore, pending outcome of this matter, no provision has been recognised.

vii) Based upon the scope of Service under UAS License and the NIA for 3G/BWA with its clarifications, in 7 such circles where the Company has not been allocated 3G spectrum, the Company has been providing 3G service under a commercial arrangement .i.e " 3G Intra Circle Roaming Agreements with other operators".

The Department of Telecommunications issued notice to the Company dated December 23, 2011 along with other Telecom Operators to stop provision of services under 3G Intra Circle Roaming Agreements where it has not won 3G Spectrum which was challenged by the Company in TDSAT wherein stay was granted against the said order by TDSAT. TDSAT on July 3, 2012 gave a split verdict on the legality of telecom operators providing 3G services to its customers in circles, where they have not been allotted the 3G spectrum.

The Department of Telecommunications (DoT) vide its letter dated March 15, 2013 has directed the Company to stop providing 3G services in these 7 circles (under Intra Circle Roaming arrangements) and has also levied a financial penalty of Rs. 3,500 Mn. The same has been challenged by the Company before Hon''ble Delhi High Court which had granted a stay vide its order dated March 18, 2013. Subsequently, one of the operators (not being a party to the litigation) approached the Division Bench of Delhi High Court and, allowing its appeal, the Division Bench vacated the stay. The Company filed a Special Leave Petition before the Supreme Court, challenging the order of the Division Bench. The Supreme Court, vide its interim order dated April 11, 2013, restrained DoT from taking any coercive action and while adjourning the matter for final hearing to May 9, 2013, also directed the Company not to extend the facilities to any new customer on the basis of the Intra Circle Roaming Arrangements in the meantime . Pending further orders from the Court, the Company continues to provide such services to existing customers under the said commercial arrangement.

i) Others

Others mainly include disputed demands for consumption tax, disputes before consumer forum and with respect to labour cases and a potential claim for liquidated damages.

The management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable. No amounts have been paid or accrued towards these demands.

j) Bharti Mobinet Limited (''BMNL'') Litigation

Bharti Airtel is in litigation in various proceedings at various stages and in various forums with DSS

Enterprises Private Limited (DSS) (which had 0.34% equity interest in erstwhiLe Bharti CeLLuLar Limited (BCL)) on cLaims of specific performance in respect of aLLeged agreements to seLL the equity interest of DSS in erstwhiLe BMNL to Bharti AirteL. In respect of one of the transactions with respect to purchase of 10.5% share of DSS in SkyceLL by Bharti, CrystaL Technologies Private Limited (''CrystaL''), an intermediary, initiated arbitration proceedings against the Company demanding Rs. 195 Mn regarding termination of its appointment as a consultant to negotiate with DSS for the saLe of DSS stake in erstwhiLe BMNL to Bharti AirteL. The Ld. Arbitrator partLy aLLowed the award for a sum of Rs. 31 Mn, 9% interest from period October 3, 2001 tiLL date of award (i.e. May 28, 2009) and a further 18% interest from date of award to date of payment. The Company appeaLed against the award. The SingLe Judge whiLe dismissing the appeaL reduced the rate of interest from 18% to 12%. The matter was appeaLed thereafter to Division Bench and finaLLy to Supreme Court wherein the matter has been admitted on the condition that the amount as per SingLe Judge Order shaLL be secured in the SC, which has been done. The matter wiLL now come up in due course.

DSS has aLso fiLed a suit against a previous shareholder of BMNL and Bharti AirteL chaLLenging the transfer of shares by that shareholder to Bharti AirteL. The matter is to be reheard.

DSS has aLso initiated arbitration proceedings seeking direction for restoration of the ceLLuLar License and the entire business associated with it incLuding aLL assets of BCL/BMNL to DSS or alternatively, an award for damages. An interim stay was granted by the DeLhi High Court with respect to the commencement of arbitration proceedings. The stay was made absoLute.

The LiabiLity, if any, of Bharti AirteL arising out of above Litigation cannot be currentLy estimated. Since the amalgamation of BCL and erstwhiLe Bharti InfoteL Limited (BIL) with Bharti AirteL, DSS, a minority sharehoLder in BCL, had been issued 2,722,125 equity shares of Rs. 10 each (5,444,250 equity shares of Rs. 5 each post spLit) bringing the share of DSS in Bharti AirteL down to 0.14% as of March 31, 2013.

The management beLieves that, based on LegaL advice, the outcome of these contingencies wiLL be favorabLe and that a Loss is not probabLe. Accordingly, no amounts have been accrued or paid in regard to this dispute.

5. Capital and Other Commitments

a) Estimated amount of contracts to be executed on capitaL account and not provided for (net of advances) Rs. 17,041 Mn as of March 31, 2013 (March 31, 2012 - Rs. 32,252 Mn).

b) Under the IT Outsourcing Agreement, the Company has estimated commitments to pay Rs. 8,245 Mn as of March 31, 2013 (March 31, 2012 - Rs. 17,452 Mn) comprising of assets and service charges. The amount represents totaL minimum commitment over the unexpired period of the contracts i.e. between 1-5 years, since it is not possibLe for the Company to determine the extent of assets and services under the contract over the unexpired period. However, the actuaL charges/payments may exceed the above mentioned minimum commitment based on the terms of contract.

6. The Company has undertaken to provide financial support, to its subsidiaries and associates,nameLy, Bharti AirteL Services Limited, Bharti AirteL (USA) Limited, Bharti AirteL (UK) Limited, Bharti AirteL (Hongkong) Limited,Bharti InternationaL (Singapore) Pte Limited, Bharti AirteL (Japan) Limited, Bharti AirteL (France) Limited, Bharti TeLemedia Limited, AirteL M Commerce Services Limited, Bharti AirteL Lanka (Pvt) Limited, AirteL BangLadesh Limited, Bharti AirteL HoLdings (Singapore) Pte Limited, Bharti AirteL International (Netherlands) B.V.incLuding its subsidiaries and associates,TeLesonic Networks Limited (earLier known as ALcateL-Lucent Network Management Services India Limited) and Bharti TeLeports Limited.

7. Acquisitions/Additional Investments/New Developments

(i) Pursuant to a definitive agreement dated May 24, 2012, Bharti Airtel Limited has acquired 49% stake for a consideration of Rs. 9,281 Mn (USD 165 Mn) in Qualcomm Asia Pacific''s (Qualcomm AP) 4 Indian subsidiaries ("BWA entities"), (i) Wireless Business Services Private Limited- that holds Category ''A'' ISP licenses and broadband wireless spectrum in the frequencies of 2327.5 - 2347.5 for the Service Area of Mumbai, 2327.5 - 2347.5 for the Service Area of Delhi, 2325.0 - 2345.0 for the Service Area of Kerala and 2362.5 - 2382.5 for the Service Area of Haryana, (ii) Wireless Broadband Business Services (Delhi) Private Limited (iii) Wireless Broadband Business Services (Kerala) Private Limited and (iv) Wireless Broadband Business Services (Haryana) Private Limited, partly by way of acquisition of 26% equity interest from its existing shareholders and balance 23% by way of subscription of fresh equity in the referred entities. The agreement contemplates that once commercial operations are launched, subject to certain terms and conditions, Bharti has the option to assume complete ownership and financial responsibility for the BWA entities by the end of 2014.

(ii) The Company has completed the launch of BWA services in Karnataka, Kolkata, Maharashtra and Punjab circles.

(iii) The Company has made equity investment of Rs. 33,367 Mn (USD 608 Mn) during the year in Bharti Airtel International (Mauritius) Limited and holds 100% shareholding.

(iv) The Company has made equity investment of Rs. 1,060 Mn in Airtel M Commerce Services Limited and holds 100% shareholding.

(v) The Company has increased its equity investment in the following subsidiaries by way of conversion of loan into equity:

- by Rs. 67,353 Mn (USD 1203.30 Mn) in Bharti Airtel International (Netherlands) B.V. (refer note 41(c))

- by Rs. 9,907 Mn (USD 177 Mn) in Bharti Airtel International (Mauritius) Limited (refer note 41(f))

- by Rs. 32,184 Mn (USD 575 Mn) in Bharti International (Singapore) Pte Limited (refer note 41(g))

(vi) On August 23, 2012, Bharti Infratel Limited (''BIL'') allotted 1,000,000,000 equity shares as fully paid bonus shares.

8. Investment in Joint Ventures/Jointly Owned Assets Jointly owned assets

a) The Company has participated in various consortiums towards supply, construction, maintenance and providing long term technical support with regards to following Cable Systems. The details of the same are as follows:

Joint Ventures Entity

b) The Company entered into a Joint Venture with 9 other overseas mobile operators to form a regional alliance called the Bridge Mobile Alliance, incorporated in Singapore as Bridge Mobile Pte Limited. The principal activity of the venture is creating and developing regional mobile services and managing the Bridge Mobile Alliance Programme. The Company has invested USD 2.2 Mn, amounting to Rs. 92 Mn, in 2.2 Mn ordinary shares of USD 1 each which is equivalent to an ownership interest of 10.00% as of March 31, 2013 (March 31, 2012 USD 2.2 Mn, Rs. 92 Mn, ownership interest 10.00%).

During the year,the Company acquired 49% stake for a consideration of Rs. 9,281 Mn (USD 165 Mn) in Qualcomm Asia Pacific''s (Qualcommn AP) 4 Indian Subsidiaries ("BWA entities"). The principal activity of the venture is to carry on the business of internet and broadband services.

9. As of March 31, 2013, Bharti AirteL Employee''s WeLfare Trust (''the Trust'') hoLds 3,937,055 equity shares (of face vaLue of Rs. 5 each) (March 31, 2012 2,456,750 equity shares) of the Company, out of which 1,498,457 equity shares were issued by the Company at the rate of Rs. 25.68 per equity share fuLLy paid up and 2,438,598 equity shares (of face vaLue of Rs. 5 each) were purchased from open market at average rate of Rs. 260.68 per equity share.

10. Loans and advances in the nature of Loans aLong with maximum amount outstanding during the year as per CLause 32 of the Listing Agreement are as foLLows:

(a) Loan and advance in the nature of Loan bearing niL interest given to Bharti TeLemedia Limited Rs. 35,026 Mn (March 31, 2012 Rs. 31,060 Mn at niL interest rate).

(b) Loan and advance in the nature of Loan given to Bharti AirteL Lanka (Private) Limited is Rs. 11,047 Mn (March 31, 2012 Rs. 11,047 Mn at LIBOR 4.5% interest rate). Effective February 10, 2012, no interest has been charged with an option for equity conversion.

(c) Loan and advance in the nature of Loan given to Bharti AirteL International (Netherlands) B.V at LIBOR 1.7% interest rate is Rs. 67,757 Mn (March 31, 2012 Rs. 50,686 Mn). Effective September 6, 2012, no interest has been charged as the outstanding Loan has been converted into equity. (Refer note 36(v)).

(d) Loan and advance in the nature of Loan given to TeLesonic Networks Limited at SBI PLR 1% interest rate is Rs. 90 Mn (March 31, 2012 Rs. 90 Mn).

(e) Loan and advance in the nature of Loan given to Bharti TeLeports Limited at 10.75% p.a. interest rate is Rs. 302 Mn (March 31, 2012 Rs. 332 Mn).

(f) Loan and advance in the nature of Loan given to Bharti AirteL International (Mauritius) Limited at LIBOR 1.7% interest rate is Rs. 9,967 Mn (March 31, 2012 Rs. 9,428 Mn). Effective September 6, 2012, no interest has been charged as the outstanding Loan has been converted into equity. (refer note 36(v)).

(g) Loan and advance in the nature of Loan given to Bharti International (Singapore) Pte Limited at LIBOR 1.7% interest rate is Rs. 32,378 Mn (March 31, 2012 Rs. 24,939 Mn). Effective September 6, 2012, no interest has been charged as the outstanding Loan has been converted into equity. (refer note 36(v)).

(h) Loan and advance in the nature of Loan given to Bharti AirteL Service Limited at niL interest is Rs. 56 Mn (March 31, 2012 Rs. 56 Mn).

(i) Loan and advance in the nature of Loan given to Bharti AirteL (USA) Limited at 7.33% interest rate is Rs. 53 Mn (March 31, 2012 Rs. 53 Mn).

Refer note 46 for cLosing amount outstanding for the year for the above entities.

11. Details of Dues to Micro and Small Enterprises as Defined Under the MSMED Act, 2006

Amounts due to micro, and small enterprises under Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 aggregate to Rs. 7 Mn (March 31, 2012 - Rs. 25 Mn) based on the information available with the Company and the confirmation received from the creditors till the year end.

12. Related Party Disclosures

In accordance with the requirements of Accounting Standards (AS) -18 on Related Party Disclosures, the names of the related parties where control exists and/or with whom transactions have taken place during the year and description of relationships are:

Name of the related party and related party relationship:

(i) Key Management Personnel

Sunil Bharti Mittal

Manoj Kohli

Sanjay Kapoor (till February 28, 2013)

Gopal Vittal (effective from February 1, 2013)

(ii) Other Related Parties

(a) Entities where control exist - Subsidiary/

Subsidiaries of Subsidiary

Bharti Hexacom Limited

Bharti Airtel Services Limited

Bharti Telemedia Limited

Bharti Airtel (USA) Limited

Bharti Airtel Lanka (Private) Limited

Bharti Airtel (UK) Limited

Bharti Airtel (Canada) Limited

Bharti Airtel (Hongkong) Limited

Bharti Infratel Limited

Network i2i Limited

Bharti Airtel Holdings (Singapore) Pte Ltd

Bharti Infratel Lanka (Private) Limited (subsidiary of Bharti Airtel Lanka (Private) Limited)

Bharti Infratel Ventures Limited (subsidiary of Bharti Infratel Limited)

Airtel M Commerce Services Limited

Bharti Airtel (Japan) Kabushiki Kaisha (subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd)

Bharti Airtel (France) SAS (subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd)

Bharti Airtel International (Mauritius) Limited

Bharti International (Singapore) Pte Ltd

Airtel Bangladesh Limited (subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd)

Bharti Airtel International (Netherlands) B.V.

Bangladesh Infratel Networks Limited (subsidiary of Airtel Bangladesh Limited)

Bharti Airtel Africa B.V. (subsidiary of Bharti Airtel International (Netherlands) B.V.)

Telesonic Networks Limited (earlier known as Alcatel-Lucent Network Management Services India Ltd) (effective from February 5, 2013)

Other subsidiaries of Bharti Airtel Africa B.V.:

Africa Towers N.V.

Africa Towers Services Limited

Airtel Ghana Limited

Airtel (SL) Limited

Airtel Burkina Faso S.A. #

Airtel Congo S.A. #

Airtel Direct to Home Services (Kenya) (dissolved on January 8, 2013)

Airtel DTH Services (SL) Limited

Airtel DTH Services Burkina Faso S.A.

Airtel DTH Services Congo (RDC) S.p.r.l

Airtel DTH Services Congo S.A.

Airtel DTH Services Gabon S.A

Airtel DTH Services Ghana Limited

Airtel DTH Services Madagascar S.A. (dissolved on October 5, 2012)

Airtel DTH Services Malawi Limited

Airtel DTH Services Niger S.A. (dissolved on November 14, 2012)

Airtel DTH Services Nigeria Limited

Airtel DTH Services T.Chad S.A. (dissolved on November 6, 2012)

Airtel DTH Services Tanzania Limited

Airtel DTH Services Uganda Limited

Bharti DTH Services Zambia Limited

Airtel Madagascar S.A.

Airtel Malawi Limited

Airtel Mobile Commerce (SL) Limited

Airtel Mobile Commerce B.V.

Airtel Mobile Commerce Burkina Faso S.A.

Airtel Mobile Commerce (Ghana) Limited

Airtel Mobile Commerce Holdings B.V.

Airtel Mobile Commerce Madagascar (S.A.)

Airtel Mobile Commerce Limited

Airtel Mobile Commerce (Tanzania) Limited

Airtel Mobile Commerce Tchad SARL

Airtel Mobile Commerce Uganda Limited

Airtel Mobile Commerce Rwanda Limited

Airtel Mobile Commerce (Kenya) Limited

Airtel Money Niger S.A.

Airtel Money (RDC) S.p.r.l

Airtel Networks Kenya Limited #

Airtel Networks Limited

Airtel Rwanda Limited

Airtel Tanzania Limited #

Airtel Towers (Ghana) Limited

Airtel Towers (S.L.) Company Limited

Airtel Uganda Limited

Airtel (Seychelles) Limited

Bharti Airtel Acquisition Holdings B.V.

Bharti Airtel Burkina Faso Holdings B.V.

Bharti Airtel Cameroon B.V.

Bharti Airtel Chad Holdings B.V.

Bharti Airtel Congo Holdings B.V.

Bharti Airtel Developers Forum Limited

Bharti Airtel DTH Holdings B.V.

Bharti Airtel Gabon Holdings B.V. #

Bharti Airtel Ghana Holdings B.V. #

Bharti Airtel Kenya B.V. #

Bharti Airtel Kenya Holdings B.V.

Bharti Airtel Madagascar Holdings B.V. #

Bharti Airtel Malawi Holdings B.V. #

Bharti Airtel Mali Holdings B.V.

Bharti Airtel Niger Holdings B.V. #

Bharti Airtel Nigeria B.V. #

Bharti Airtel Nigeria Holdings B.V.

Bharti Airtel Nigeria Holdings II B.V.

Bharti Airtel Cameroon Holding B.V. (dissolved on March 27, 2013)

Bharti Airtel RDC Holdings B.V.

Bharti Airtel Services B.V.

Bharti Airtel Sierra Leone Holdings B.V. #

Bharti Airtel Tanzania B.V. #

Bharti Airtel Uganda Holdings B.V. #

Bharti Airtel Zambia Holdings B.V. #

Burkina Faso Towers S.A.

Celtel (Mauritius) Holdings Limited

Celtel Cameroon SA (dissolved on March 26, 2013)

Celtel Congo (RDC) S.a.r.l. #

Airtel Gabon S.A. (formerly Celtel Gabon S.A w.e.f.July 11, 2012)

Celtel Niger S.A.

Airtel Tchad S.A. (formerly Celter Tchad S.A.w.e.f. June 1, 2012) #

Celtel Zambia plc

Channel Sea Management Company (Mauritius) Limited

Congo (RDC) Towers S.p.r.l.

Congo Towers S.A.

Gabon Towers S.A.

Indian Ocean TeLecom Limited Kenya Towers Limited

Madagascar Towers S.A.

MaLawi Towers Limited

MobiLe Commerce Congo S.A.

AirteL Money S.A. (Gabon) (formerLy MobiLe Commerce Gabon S.A w.e.f. June 25, 2012)

Montana InternationaL MSI-CeLteL Nigeria Limited Niger Towers S.A.

Partnership Investments SprL

Rwanda Towers Limited

Societe MaLgache de TeLephonie CeLLuLaire SA

Tanzania Towers Limited

Tchad Towers S.A.

Towers Support Nigeria Limited Uganda Towers Limited Zambian Towers Limited Zap Trust Company Nigeria Limited Zebrano (Mauritius) Limited ZMP Limited

(b) Associates/Associate of Subsidiary

Bharti TeLeports Limited

Tanzania Telecommunications Company Limited (Associate of Bharti AirteL Tanzania B.V.)

TeLesonic Networks Limited (earLier known as ALcateL-Lucent Network Management Services India Ltd) (tiLL February 4, 2013)

SeycheLLes CabLe Systems Company Limited (Associate of AirteL (SeycheLLes) Limited)

(c) Joint Ventures/Joint Venture of Subsidiary Forum I Aviation Limited (Joint Venture of Bharti AirteL Services Limited)

Indus Towers Limited (Joint Venture of Bharti InfrateL Limited)

Bridge MobiLe Pte Limited

WireLess Broadband Business Services (DeLhi)

Private Limited (acquired on May 24, 2012)*

WireLess Broadband Business Services (Haryana) Private Limited (acquired on May 24, 2012)*

WireLess Broadband Business Services (KeraLa) Private Limited (acquired on May 24, 2012)*

WireLess Business Services Private Limited (acquired on May 24, 2012)*

(d) Entities where Key Management PersonneL and their relatives exercise significant influence/Group Companies

BeeteL TeLetech Limited

Bharti AirteL EmpLoyees WeLfare Trust

Bharti Axa GeneraL Insurance Company Limited

Bharti Axa Life Insurance Company Limited

Bharti Enterprises Limited

Bharti Foundation

Bharti ReaLty HoLdings Limited

Bharti ReaLty Limited

Bharti RetaiL Limited

Bharti Softbank HoLdings Pte Limited

Bharti WaL-Mart Private Limited

Centum Learning Limited

Comviva TechnoLogies Limited (tiLL December 13, 2012)

FieLdfresh Foods Private Limited Guernsey AirteL Limited Indian Continent Investment Limited Jersey AirteL Limited NiLe Tech Limited

MehrauLi ReaLty and Consultants Limited

(e) Entities having significant influence over the Company

Singapore Telecommunications Limited

PasteL Limited

Bharti TeLecom Limited

* Refer note 36 above for detaiLs of new operations during the year.

# Transactions of similar nature with such subsidiaries have been clubbed and shown under the head ''Other African Subsidiaries'' as their contribution to total transaction vaLue is Less than 10%.

13. Employee Stock Compensation

(i) Pursuant to the shareholders'' resolutions dated February 27, 2001 and September 25, 2001, the Company introduced the "Bharti Tele-Ventures Employees'' Stock Option Plan" (hereinafter called "the Old Scheme") under which the Company decided to grant, from time to time, options to the employees of the Company and its subsidiaries. The grant of options to the employees under the Old Scheme is on the basis of their performance and other eligibility criteria.

(ii) On August 31, 2001 and September 28, 2001, the Company issued a total of 1,440,000 (face value Rs. 10 each) equity shares at a price of Rs. 565 per equity share to the Trust. The Company issued bonus shares in the ratio of 10 equity shares for every one equity share held as at September 30, 2001, as a result of which the total number of shares allotted to the trust increased to 15,840,000 (face value Rs. 10 each) equity shares.

(iii) Pursuant to the shareholders'' resolution dated September 6, 2005, the Company announced a new Employee Stock Option Scheme (hereinafter called "the New Scheme") under which the maximum quantum of options was determined at 9,367,276 (face value Rs. 10 each) options to be granted to the employees from time to time on the basis of their performance and other eligibility criteria.

14. Forward Contracts & Derivative Instruments and Unhedged Foreign Currency Exposure

The Company''s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange contracts, option contracts and interest rate swaps to manage its exposures to interest rate and foreign exchange fluctuations.

15. a) The Board of Directors, in its meeting held on May 2, 2012, recommended a final dividend of Rs. 1.00 per equity share of Rs. 5.00 each (20% of face value) for financial year 2011-12, which was duly approved by the shareholders of the Company in the Annual General Meeting held on September 6, 2012.

b) Net Dividend remitted in foreign exchange:

16. DetaiLs of debt covenant w.r.t. the Company''s 3G/BWA borrowings:

The Loan agreements with respect to 3G/BWA borrowings contains a negative pLedge covenant that prevents the Company to create or aLLow to exist any Security Interest on any of its assets without prior written consent of the Lenders except in certain agreed circumstances.

17. The Company has approved the transfer of its co-ownership in the undersea cabLes and its indefeasibLe right of usage in reLated backhauL assets taken from other operators to its whoLLy owned subsidiary Network i2i Limited, a company incorporated and existing under the Laws of Mauritius with the intention to aggregate aLL internationaL undersea cabLes under a singLe entity. Pending approvaL from consortium partners/appropriate authorities, wherever appLicabLe, no adjustment has been made in the financiaL statements for the year ended March 31, 2013 and the carrying amount of Rs. 4,842 Mn of identified assets (for which approvaL has been received) have been continued to be cLassified under Fixed Assets as the Company continues to use these cabLes. Further, the approvaL from appropriate authorities for remaining assets with the carrying amount of Rs. 4,767 Mn is pending to be received.

18. The Company has completed the transfer pricing study for the period upto March 31, 2012. For the year ended March 31, 2013, the Company is in the process of getting an independent evaluation done for certain transactions to determine whether the transactions with associated enterprises were undertaken at "arms Length price". Based on the transfer pricing study, the Company beLieves that aLL transactions with associate enterprises are at arm Length price, accordingly, there is no Transfer Pricing adjustments for the year under consideration.

19. During the year ended March 31, 2013, Bharti InfrateL Limited (BIL), a subsidiary of the Company, has made InitiaL PubLic Offering (IPO) through book buiLding process of 188,900,000 equity shares of Rs. 10 each. The IPO comprised of fresh issue of 146,234,112 equity shares of Rs. 10 each by BIL and an offer for saLe of 42,665,888 equity shares of Rs. 10 each by the existing shareholders.

BIL has raised Rs. 32,303 Mn from fresh issue of shares. Post the issue, the hoLding of the Company in BIL has reduced from 86.09% to 79.42%. The equity shares were aLLotted on December 22, 2012.

20. During the year ended March 31, 2013, the Company was awarded a favorabLe order by the TDSAT in respect of an outstanding dispute pertaining to inter- connect agreements. The Company, based on the TDSAT judgment and independent LegaL opinion, has recognised revenue of Rs. 5,167 Mn, resulting in higher profit before tax by Rs. 3,012 Mn, and net profit by Rs. 2,169 Mn, during the year ended March 31, 2013, reLating to previous year.

21. During the year ended March 31, 2013, DoT has issued demand notices for the financial year 2006-07 to 2010-11 aggregating Rs. 23,763 Mn in respect of assessment of Licenses towards disaLLowances of the permissibLe deductions.

Further, DoT has aLso issued demands in the matter of Spectrum Usage Charge (SUC) assessment for the financial years 2010-11 & 2011-12 aggregating Rs. 8,221 Mn arising on account of disaLLowance of adjustments made by the group in terms of TDSAT orders dated November 19, 2009 and ApriL 22, 2010.

The Company has taken the appropriate action/legal recourse and believes that the probability of above claims getting materialised is remote.

22. The Company (M/s J T Mobiles Limited subsequently merged with the Company) was awarded license by DoT to operate cellular services in the state of Punjab in December 1995. On April 18, 1996, the Company obtained the permission from DoT to operate the Punjab license through its wholly owned subsidiary, Evergrowth Telecom Limited (ETL). On December 1996, DoT raised argument that the permission dated April 18, 1996 has not become effective and cancelled the permission to operate which was subsequently reinstated on March 10, 1998 (the period from April 18, 1996 to March 10, 1998 has been hereinafter referred to as ''blackout period''). On July 15, 1999, license was terminated due to alleged non-payment of license fees, liquidated damages and related penal interest relating to blackout period.

In September, 2001, in response to the demand raised by DoT, the Company had paid Rs. 4,856 Mn to DoT under protest subject to resolution of the dispute through arbitration. Consequently, the license was restored and an arbitrator was appointed for settlement of the dispute. Arbitrator awarded an unfavourable order, which was challenged by the Company before Hon''ble Delhi High Court.

On September 14, 2012, Hon''ble Delhi High Court passed an order setting aside the award passed by the arbitrator. DoT in the meanwhile has preferred an Appeal, including condonation of delay in filing of appeal, which is presently pending before the Division Bench of the Delhi High Court. The Appeal on the issue of condonation of delay is listed for arguments on May 8, 2013.

The Company is in the process of evaluating legal course of action for recovery of the amount paid under protest together with interest thereon. Pending such evaluation and thereby initiation of recovery process, the Group, based on independent legal opinion, has not given any accounting treatment for the impact of the judgement in the financial statements for the year ended March 31, 2013.

23. Previous year figures have been regrouped/reclassified where necessary to conform to current year''s classification.


Mar 31, 2012

1. CORPORATE INFORMATION

Bharti Airtel Limited ('the Company') incorporated in India on July 7, 1995, is a company promoted by Bharti Telecom Limited ('BTL'), a company incorporated under the laws of India. The Company's shares are publicly traded on the National Stock Exchange ('NSE') and the Bombay Stock Exchange ('BSE'), India. The Registered office of the Company is situated at Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase - II, New Delhi - 110070.

The Company is a leading telecommunication service provider in India providing telecommunication systems and services.

2. BASIS OF PREPARATION

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The financial statements have been prepared to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, ('as amended') and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year, except for the change as explained in note 2.1 (a) below.

3. INFORMATION ABOUT BUSINESS SEGMENTS-PRIMARY

Segment Definitions:

The Company's operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

Mobile Services - These services cover voice and data telecom services provided through GSM technology in India. This includes the captive national long distance networks which primarily provide connectivity to the mobile services business in India.

Telemedia Services - These services cover voice and data communications based on fixed network and broadband technology.

Airtel Business - These services cover end-to-end telecom solutions being provided to large Indian and global corporations by serving as a single point of contact for all telecommunication needs across data and voice (domestic as well as international long distance), network integration and managed services.

a. Terms/rights attached to equity shares

The Company has only one class of equity shares having par value of Rs. 5 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing annual general meeting.

During the year ended March 31, 2012, the amount of dividend per share recognized as distributions to equity shareholders was Rs. 1.00 (March 31, 2011 Rs. 1.00).

a. 'Others' under secured loans represent vehicle loans from bank which are secured by hypothecation of vehicles of the Company.

b. Details on analysis of borrowings i.e. Maturity profile, interest rate and currency of borrowings

c. The borrowings of Rs. 94,058 Mn outstanding as of March 31, 2012 is repayable in 338 half yearly installments (borrowings of Rs. 91,331 Mn outstanding as of March 31, 2011 includes borrowings of Rs. 84,996 Mn repayable in 388 half yearly instalments and borrowings of Rs. 6,335 Mn repayable in 2 bullet instalments).

b. MAT credit includes income of Rs. 333 Mn (March 31, 2011 Rs. 345 Mn) relating to earlier years and current tax includes income of Rs. 29 Mn (March 31, 2011 Rs. 13 Mn) relating to earlier years.

c. During the year ended March 31, 2012, the Company has changed the trigger date for earlier years for certain business units enjoying Income tax holiday under the Indian tax laws. Accordingly, income tax credit of Rs. 903 Mn pertaining to earlier years has been recognized during the year ended March 31, 2012.

a. 'Others' include rent equalization reserve of Rs. 10,692 Mn as of March 31, 2012 (Rs. 8,333 Mn as of March 31, 2011).

b. Security deposit Rs. 5,091 Mn (March 31, 2011 Rs. 2,755 Mn) included under 'Security deposit received', represents refundable security deposits received from subscribers on activation of connections granted thereto and are repayable on disconnection, net of outstanding, if any and security deposits received from channel partners. Trade receivables are secured to the extent of the amount outstanding against individual subscribers by way of security deposit received from them.

The Company uses various premises on lease to install the equipment. A provision is recognized for the costs to be incurred for the restoration of these premises at the end of the lease period. It is expected that this provision will be utilized at the end of the lease period of the respective sites as per the respective lease agreements. The movement of provision in accordance with AS-29 Provisions, Contingent liabilities and Contingent Assets' notified under Companies (Accounting Standards) Rules, 2006 ('as amended') , is given below:

a. Freehold Land and Building includes Rs. 226 Mn (March 31, 2011 Rs. 368 Mn) and Rs. 559 Mn (March 31, 2011 Rs. 594 Mn) respectively, in respect of which registration of title in favour of the Company is pending

b. Building includes building on leashold land:

Gross Block Rs. 1,872 Mn (March 31, 2011 Rs. 1,838 Mn)

Depreciation charge for the year Rs. 237 Mn (March 31, 2011 Rs. 233 Mn)

Accumulated depreciation Rs. 947 Mn (March 31, 2011 Rs. 710 Mn)

Net book value Rs. 925 Mn (March 31, 2011 Rs. 1,128 Mn)

c. Reclassification/Adjustment includes reclass of assets between category of assets. During the year ended March 31, 2011, Rs. 3,866 Mn and Rs. 1,149 Mn gross block and accumulated depreciation respectively, has been reclassified from tangible assets to intangible assets.

d. Capital work in progress includes goods in transit Rs. 785 Mn (March 31, 2011 Rs. 1,174 Mn).

e. Refer note 9, 38 and 46 for ARO, jointly owned assets and assets given on operating lease.

a. The remaining amortisation period of licence fees as at March 31, 2012 ranges between 3 to 13 years for Unified Access Service Licences, 10 years for Long Distance Licences, 18.4 years for 3G spectrum fees.

b. Licences includes Net Block of 3G spectrum fees of Rs. 116,106 Mn as on March 31, 2012 (March 31, 2011 Rs. 105,795 Mn).

c. Capitalised borrowing costs

The borrowing cost capitalised during the year ended March 31, 2012 was Rs. 1,565 Mn (March 31, 2011 Rs. 4,314 Mn). The Company capitalized this borrowing cost in the intangible assets under development. The amount of borrowing cost included in intangible assets under development is Rs. 2,293 Mn (March 31, 2011 Rs. 1,269 Mn).

d. Reclassification/Adjustment includes reclass of assets between category of assets. During the year ended March 31, 2012, Rs. 1,380 Mn and Rs. 241 Mn gross block and accumulated depreciation respectively, has been reclassified from intangible assets to capital advances (refer note 17 Long-term loans and advances) in respect of deactivated band with links (March 31, 2011, Rs. 3,866 Mn and Rs. 1,149 Mn gross block and accumulated depreciation respectively, has been reclassified from tangible assets to intangible assets).

4. CONTINGENT LIABILITIES

(i) Total Guarantees outstanding as at March 31, 2012 amounting to Rs. 27,158 Mn (March 31, 2011 - Rs. 25,140 Mn) have been issued by banks and financial institutions on behalf of the Company.

Corporate Guarantees outstanding as at March 31, 2012 amounting to Rs. 481,376 Mn (March 31, 2011 - Rs. 452,314 Mn) have been given to banks, financial institutions and third parties on behalf of Group Companies at no cost to the latter.

(ii) Claims against the Company not acknowledged as debt (Excluding cases where the possibility of any outflow in settlement is remote):

Unless otherwise stated below, the management believes that, based on legal advice, the outcome of these contingencies will be favorable and that a loss is not probable.

Post the Hon'ble Supreme Court Judgement on October 11, 2011 on components of Adjusted Gross Revenue for computation of License fee, based on the legal advice, the Company believes that the realized and unrealized foreign exchange gain should not be included in Adjusted Gross Revenue (AGR) for computation of license fee thereon. Accordingly, the license fee on such foreign exchange gain has not been provided in these financial statements. Also, due to ambiguity of interpretation of 'foreign exchange differences', the license fee impact on such exchange difference is not quantifiable and has not been included in the table above.

b) Sales tax

The claims for sales tax as at March 31, 2012 comprised the cases relating to:

i. the appropriateness of the declarations made by the Company under the relevant sales tax legislations which was primarily procedural in nature;

ii. the applicable sales tax on disposals of certain property and equipment items;

iii. lease circuit/broadband connectivity services;

iv. the applicability of sales tax on sale of SIM cards, SIM replacements, VAS, Handsets and Modem rentals;

v. In the State of J&K, the Company has disputed the levy of General Sales Tax on its telecom services and towards which the Company has received a stay from the Hon'ble J&K High Court. The demands received to date have been disclosed under contingent liabilities. Based on the Company's evaluation, it believes that it is not probable that the claim will materialise and therefore, no provision has been recognised.

c) Service tax

The service tax demands as at March 31, 2012 relate to:

i. cenvat claimed on tower and related material,

ii. levy of service tax on SIM cards,

iii. cenvat credit disallowed for procedural lapses and inadmissibility of credit,

iv. disallowance of cenvat credit used in excess of 20% limit, and

v. employee talk time.

d) Income tax demand under appeal

Income tax demands under appeal mainly included the appeals filed by the Company before various appellate authorities against the disallowance of certain expenses being claimed under tax by income tax authorities, non-deduction of tax at source with respect to dealers/distributor's margin and non-deduction of tax on payments to international operators for access charges etc. The management believes that, based on legal advice, its tax positions will be sustained and accordingly, recognition of a provision for those tax positions will not be appropriate.

e) Custom duty

The custom authorities, in some states, demanded Rs. 2,198 Mn as at March 31, 2012 (March 31, 2011 - Rs. 2,198 Mn) for the imports of special software on the ground that this would form part of the hardware along with which the same has been imported. The view of the Company is that such imports should not be subject to any custom duty as it would be an operating software exempt from any custom duty. Based on the Company's evaluation, it believes that it is not probable that the claim will materialise and therefore, no provision has been recognised.

f) Entry tax

In certain states an entry tax is levied on receipt of material from outside the state. This position has been challenged by the Company in the respective states, on the grounds that the specific entry tax is ultra vires the constitution. Classification issues have also been raised whereby, in view of the Company, the material proposed to be taxed not covered under the specific category. The amount under dispute as at March 31, 2012 was Rs. 2,624 Mn (March 31, 2011 - Rs. 2,521 Mn) included in Note 25 (ii) (a) above.

g) Access charges (Interconnect Usage Charges)/Port charges

Interconnect charges are based on the Interconnect Usage Charges (IUC) agreements between the operators although the IUC rates are governed by the IUC guidelines issued by TRAI. BSNL has raised a demand requiring the Company to pay the interconnect charges at the rates contrary to the guidelines issued by TRAI. The Company filed a petition against that demand with the Telecom Disputes Settlement and Appellate Tribunal ('TDSAT') which passed a status quo order, stating that only the admitted amounts based on the guidelines would need to be paid by the Company.

The management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable. Accordingly, no amounts have been accrued although some have been paid under protest.

In another proceeding with respect to Distance Based Carriage Charges, the Hon'ble TDSAT in its order dated May 21, 2010, allowed BSNL appeal praying to recover distance based carriage charges. On filing of appeal by the Telecom Operators, Hon'ble Supreme Court asked the Telecom Operators to furnish details of distance-based carriage charges owed by them to BSNL. Further, in a subsequent hearing held on Aug 30, 2010 Hon'ble Supreme Court sought the quantum of amount in dispute from all the operators as well as BSNL and directed both BSNL and Private telecom operators to furnish CDRs to TRAI. The CDRs have been furnished to TRAI. The management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable.

In another issue with respect to Port Charges, in 2001, TRAI had prescribed slab based rate of port charges payable by private operators which were subsequently reduced in the year 2007 by TRAI. On BSNL's appeal, TDSAT passed it's judgment in favour of BSNL, and held that the pre-2007 rates shall be applicable prospectively from May 29, 2010. The management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable.

h) DoT Demands

i) The Company has not been able to meet its roll out obligations fully due to certain non-controllable factors like Telecommunication Engineering Center testing, Standing Advisory Committee of Radio Frequency Allocations clearance, non availability of spectrum, etc. The Company has received show cause notices from DoT for 14 of its circles for non-fulfillment of its roll out obligations and these have been replied to. DoT has reviewed and revised the criteria and there has been no further development on this matter since then.

ii) DoT demands include demands raised for contentious matters relating to computation of license fees and spectrum charges

iii) DoT demands also include the following contentious matters :-

a) In respect of subscriber verification norms and regulations including validity of certain documents allowed as Proof of Address/Identity in a mobility circle

b) In respect of invalid calling line identification (CLI) appearing in calls made to BSNL for certain promotional business calls in a mobility circle

c) In respect of alleged non compliance to certain license conditions related to renting/transfer of sim cards in a mobility circle

d) In respect of provision of IPLC services to a non-licensed entity which has directly sold the same to a customer located in India in Airtel Business segment.

The above stated matters are being contested by the Company and the Company, based on legal advice, believes that it has complied with all license related regulations as and when prescribed and does not expect any loss relating to these matters.

i) Others

Others mainly include disputed demands for consumption tax, disputes before consumer forum and with respect to labour cases and a potential claim for liquidated damages.

The management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable. No amounts have been paid or accrued towards these demands.

j) Bharti Mobinet Limited ('BMNL') litigation

Bharti Airtel is in litigation in various proceedings at various stages and in various forums with DSS Enterprises Private Limited (DSS) (which had 0.34 per cent equity interest in erstwhile Bharti Cellular Limited (BCL)) on claims of specific performance in respect of alleged agreements to sell the equity interest of DSS in erstwhile BMNL to Bharti Airtel. In respect of one of the transactions with respect to purchase of 10.5% share of DSS in Skycell by Bharti, Crystal Technologies Private Limited ('Crystal'), an intermediary, initiated arbitration proceedings against the Company demanding Rs. 195 Mn regarding termination of its appointment as a consultant to negotiate with DSS for the sale of DSS stake in erstwhile BMNL to Bharti Airtel. The Ld. Arbitrator partly allowed the award for a sum of Rs. 31 Mn, 9% interest from period October 3, 2001 till date of award (i.e May 28, 2009) and a further 18% interest from date of award to date of payment. The Company appealed against the award. The Single Judge while dismissing the appeal reduced the rate of interest from 18% to 12%. The matter was appealed thereafter to Division Bench and finally to Supreme Court wherein the matter has been admitted on the condition that the amount as per Single Judge Order shall be secure in the SC, which has been done. The matter will now come up in due course.

DSS has also filed a suit against a previous shareholder of BMNL and Bharti Airtel challenging the transfer of shares by that shareholder to Bharti Airtel. The matter is to be reheard.

DSS has also initiated arbitration proceedings seeking direction for restoration of the cellular license and the entire business associated with it including all assets of BCL/BMNL to DSS or alternatively, an award for damages. An interim stay was granted by the Delhi High Court with respect to the commencement of arbitration proceedings. The stay was made absolute.

The liability, if any, of Bharti Airtel arising out of above litigation cannot be currently estimated. Since the amalgamation of BCL and erstwhile Bharti Infotel Limited (BIL) with Bharti Airtel, DSS, a minority shareholder in BCL, had been issued 2,722,125 equity shares of Rs. 10 each (5,444,250 equity shares of Rs. 5 each post split) bringing the share of DSS in Bharti Airtel down to 0.14% as at March 31, 2012.

The management believes that, based on legal advice, the outcome of these contingencies will be favorable and that a loss is not probable. Accordingly, no amounts have been accrued or paid in regard to this dispute.

k) During January, 2012, DoT has issued a show cause notice to the Company for alleged short payment of Licence Fee of Rs. 2,920 Mn including interest for the year 2006-07 and 2007-08. The Company has submitted its reply against the same and is confident that there will be no amounts payable in this regard.

5. CAPITAL AND OTHER COMMITMENTS

a) Estimated amount of contracts to be executed on capital account and not provided for (net of advances) Rs. 32,252 Mn as at March 31, 2012 (March 31, 2011 - Rs. 22,484 Mn).

b) Under the IT Outsourcing Agreement, the Company has estimated commitments to pay Rs. 17,452 Mn as at March 31, 2012 (March 31, 2011 - Rs. 20,717 Mn) comprising of assets and service charges. The amount represents total minimum commitement over the unexpired period of the contracts i.e. between 2-10 years, since it is not possible for the Company to determine the extent of assts and services under the contract over the unexpired period. However, the actual charges/ payments may exceed the above mentioned minimum commitment based on the terms of contract.

c) Bharti Airtel has obtained licenses under the Export Promotion Capital Goods ('EPCG') Scheme for importing capital goods at a concessional rate of customs duty against submission of bank guarantee and bonds.

Under the terms of the respective schemes, the Company is required to export goods of FOB value equivalent to, or more than, five times the CIF value of imports in respect of certain licenses and eight times the duty saved in respect of licenses where export obligation has been refixed by the order of Director General Foreign Trade, Ministry of Finance, as applicable within a period of eight years from the import of capital goods. The Export Promotion Capital Goods Scheme, Foreign Trade Policy 2004-2009 as issued by the Central Government of India, covers both manufacturer exporters and service providers. Accordingly, in accordance with Clause 5.2 of the Policy, export of telecommunication services would also qualify.

Accordingly, the Company is required to export goods and services of FOB value of Rs. NIL as at March 31, 2012 (March 31, 2011 Rs. 2,404 Mn) by November 24, 2018.

6. The Company has undertaken to provide financial support, to its subsidiaries and associates Bharti Airtel Services Limited, Bharti Airtel (USA) Limited, Bharti Airtel (Hongkong) Limited, Bharti Telemedia Limited, Airtel M Commerce Services Limited, Bharti Airtel Lanka (Pvt) Limited and Bharti Airtel International (Netherlands) B.V. including its subsidiaries and associates, Alcatel-Lucent Network Management Services India Limited and Bharti Teleports Limited.

7. NEW OPERATIONS

a) The Company had invested Rs. 201 Mn in Bharti Airtel International (Mauritius) Limited, during the year ended March 31, 2012 and holds 100% of the total shareholding as on March 31, 2012.

b) The Company had invested Rs. 211 Mn in Bharti International (Singapore) Pte Limited, during the year ended March 31, 2012 and holds 50.91% of the total shareholding as on March 31, 2012.

c) The Company had invested Rs. 480 Mn in Airtel M Commerce Services Limited during the year ended March 31, 2012, out of which equity shares of Rs. 20 Mn were acquired from Bharti Airtel Services Limited and Rs. 280 Mn have been invested during the quarter ended March 31, 2012. The Company currently holds 100% of the total shareholding as on March 31, 2012.

d) On April 5, 2011, Airtel DTH Services Congo (RDC) S.p.r.l. had been incorporated as a wholly owned subsidiary of Bharti Airtel DTH Holdings B.V. (a wholly-owned subsidiary of Bharti Airtel Africa B.V.).

e) On April 5, 2011, Airtel Mobile Commerce Madagascar S.A. had been incorporated as a wholly owned subsidiary of Airtel Mobile Commerce B.V. (formerly known as Zap Mobile Commerce B.V., a wholly owned subsidiary of Bharti Airtel International (Netherlands) B.V.). Airtel Mobile Commerce B.V. had invested Rs. 0.05 Mn in the newly incorporated company.

f) On April 5, 2011, Congo RDC Towers S.p.r.l. had been incorporated as a wholly owned subsidiary of Africa Towers N.V. (a wholly owned subsidiary of Bharti Airtel International (Netherlands) B.V.).

g) On May 17, 2011, Gabon Towers S.A. had been incorporated as a wholly owned subsidiary of Africa Towers N.V. (a wholly owned subsidiary of Bharti Airtel International (Netherlands) B.V.). Africa Towers N.V. had invested Rs. 1 Mn in the newly incorporated company.

h) On May 26, 2011, Airtel DTH Services Gabon S.A. had been incorporated as a wholly owned subsidiary of Bharti Airtel DTH Holdings B.V. (a wholly-owned subsidiary of Bharti Airtel Africa B.V.). Bharti Airtel DTH Holdings B.V. had invested Rs. 0.7 Mn in the newly incorporated company.

i) On June 26, 2011, Bangladesh Infratel Networks Limited had been incorporated as a wholly owned subsidiary of Airtel Bangladesh Limited (a subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd). Airtel Bangladesh Limited had invested Rs. 0.06 Mn in the newly incorporated company.

j) On July 8, 2011, Aero Ventures Limited had been incorporated as a wholly owned subsidiary of Network i2i Limited (a wholly-owned subsidiary of Bharti Airtel Limited). Network i2i Limited had invested Rs. 48.93 towards subscription of 1 share of USD 1 in the newly incorporated company. During the year Network i2i Limited had made further investment of Rs. 2,410 Mn. On March 20, 2012, Network i2i Limited has sold its entire equity stake in Aero Ventures Limited to Malaysian Jet Services Sdn. Bhd., Malaysia for a total consideration of Rs. 2,543 Mn (USD 50.6 Mn).

k) On August 15, 2011, Bharti Airtel Cameroon B.V. (formerly known as Bharti Airtel Rwanda Holdings B.V.) had been incorporated as a wholly owned subsidiary of Bharti Airtel Africa B.V. (a wholly-owned subsidiary of Bharti Airtel International (Netherlands) B.V.). Bharti Airtel Africa B.V. had invested Rs. 1.15 Mn in the newly incorporated company.

l) On September 2, 2011, Airtel Rwanda Limited had been incorporated as the wholly owned subsidiary of Bharti Airtel Cameroon B.V. (formerly known as Bharti Airtel Rwanda Holdings B.V., a wholly owned subsidiary of Bharti Airtel Africa B.V.). Subsequently on September 15, 2011, Bharti Airtel Cameroon B.V. had transferred 100% of its holdings in the newly incorporated company to Zebrano (Mauritius) Limited (formerly known as Zain (IP) Mauritius Limited) (a wholly- owned subsidiary of Bharti Airtel Africa B.V.).

m) On September 8, 2011, Africa Towers Services Limited had been incorporated as the jointly owned entity of Africa Towers N.V. (a wholly-owned subsidiary of Bharti Airtel International (Netherlands) B.V.) and Bharti Airtel International (Netherlands) B.V.

n) On September 12, 2011, Rwanda Towers Limited had been incorporated as the wholly owned subsidiary of Africa Towers N.V. (a wholly owned subsidiary of Bharti Airtel International (Netherlands) B.V.).

o) The Company has invested Rs. 98 Mn for its proportionate share in Bharti Teleports Limited, during the quarter ended March 31, 2012 and continues to hold 49% of the total shareholding as on March 31, 2012.

p) During the year ended March 31, 2012, the Company has completed the launch of 3G services in all its eligible licensed circles in India.

d) The expected rate of return on plan assets was based on the average long-term rate of return expected to prevail over the next 15 to 20 years on the investments made by LIC. This was based on the historical returns suitably adjusted for movements in long-term Government bond interest rates. The discount rate is based on the average yield on Government bonds of 20 years.

e) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

f) The table below illustrates experience adjustment disclosure as per para 120 (n) (ii) of Accounting Standard 15, 'Employee Benefits'

8. INVESTMENT IN JOINT VENTURES/JOINTLY OWNED ASSETS Jointly owned assets

a) The Company has participated in various consortiums towards supply, construction, maintenance and providing long term technical support with regards to following Cable Systems. The details of the same are as follows:

Joint Ventures Entity

b) The Company entered into a Joint Venture with 9 other overseas mobile operators to form a regional alliance called the Bridge Mobile Alliance, incorporated in Singapore as Bridge Mobile Pte Limited. The principal activity of the venture is creating and developing regional mobile services and managing the Bridge Mobile Alliance Programme. The Company has invested USD 2.2 Mn, amounting to Rs. 92 Mn, in 2.2 Mn ordinary shares of USD 1 each which is equivalent to an ownership interest of 10.00% as at March 31, 2012 (March 31, 2011 USD 2.2 Mn, Rs. 92 Mn, ownership interest 10.00%).

9. As at March 31, 2012, Bharti Airtel Employee's Welfare Trust ('the Trust') holds 2,456,750 equity shares (of face value of Rs. 5 each) (March 31, 2011 2,964,623 equity shares) of the Company, out of which 1,792,383 equity shares were issued at the rate of Rs. 25.68 per equity share fully paid up and 664,367 equity shares (of face value of Rs. 5 each) are purchased from open market at average rate of Rs. 354.57 per equity share.

10. Loans and advances in the nature of loans along with maximum amount outstanding during the year as per Clause 32 of Listing Agreement are as follows:

(a) Loan and advance in the nature of loan bearing nil interest given to Bharti Telemedia Limited Rs. 31,060 Mn (March 31, 2011 Rs. 24,969 Mn).

(b) Loan and advance in the nature of loan given to Bharti Airtel Lanka (Private) Limited is Rs. 11,047 Mn (March 31, 2011 Rs. 9,697 Mn at LIBOR 4.5% interest rate). Effective February 10, 2012, no interest has been charged with an option for equity conversion.

(c) Loan and advance in the nature of loan given to Bharti Airtel International (Netherlands) B.V at LIBOR 1.7% interest rate is Rs. 50,686 Mn (March 31, 2011 Rs. 11,654 Mn).

(d) Loan and advance in the nature of loan given to Alcatel-Lucent Network Management Services India Limited at SBI PLR 1% interest rate is Rs. 90 Mn (March 31, 2011 Rs. 90 Mn).

(e) Loan and advance in the nature of loan given to Bharti Teleports Limited at 13% p.a. interest rate is Rs. 332 Mn (March 31, 2011 Rs. 210 Mn).

(f) Loan and advance in the nature of loan given to Bharti Airtel International (Mauritius) Limited at LIBOR 1.7% interest rate is Rs. 9,428 Mn (March 31, 2011 NIL).

(g) Loan and advance in the nature of loan given to Bharti International (Singapore) Pte Limited at LIBOR 1.7% interest rate is Rs. 24,939 Mn (March 31, 2011 NIL).

(h) Loan and advance in the nature of loan given to Bharti Airtel Services Limited at nil interest is Rs. 56 Mn (March 31, 2011 Rs. 56 Mn).

(i) Loan and advance in the nature of loan given to Bharti Airtel (USA) Limited at 7.33% interest rate is Rs. 53 Mn (March 31, 2011 Rs. 45 Mn).

11. RELATED PARTY DISCLOSURES

In accordance with the requirements of Accounting Standards (AS) -18 on Related Party Disclosures, the names of the related parties where control exists and/or with whom transactions have taken place during the year and description of relationships, as identified and certified by the management are:

Name of the Related Party and Relationship :

(i) Key Management Personnel

Sunil Bharti Mittal

Manoj Kohli

Sanjay Kapoor

(ii) Other Related Parties

(a) Entities where control exist - Subsidiary/Subsidiaries of subsidiary

Bharti Hexacom Limited

Bharti Airtel Services Limited

Bharti Telemedia Limited

Bharti Airtel (USA) Limited

Bharti Airtel Lanka (Private) Limited

Bharti Airtel (UK) Limited

Bharti Airtel (Canada) Limited

Bharti Airtel (Hongkong) Limited

Bharti Infratel Limited

Network i2i Ltd

Bharti Airtel Holdings (Singapore) Pte Ltd

Bharti Infratel Lanka (Private) Limited (subsidiary of Bharti Airtel Lanka (Private) Limited)

Bharti Infratel Ventures Limited (subsidiary of Bharti Infratel Limited)

Airtel M Commerce Services Limited

Bharti Airtel (Japan) Kabushiki Kaisha (subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd)

Bharti Airtel (France) SAS (subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd)

Bharti Airtel International (Mauritius) Limited

Bharti International (Singapore) Pte Ltd

Airtel Bangladesh Limited

(subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd)

Bharti Airtel International (Netherlands) B.V.

Bangladesh Infratel Networks Limited (incorporated on June 26, 2011) *

Aero Ventures Limited (incorporated on July 8, 2011) (ceased to be a subsidiary on March 20, 2012) *

Bharti Airtel Africa B.V. (Subsidiary of Bharti Airtel International (Netherlands) B.V.)

Other subsidiaries of Bharti Airtel Africa B.V. :

Africa Towers N.V.

Africa Towers Services Limited (incorporated on September 8, 2011) *

Airtel (Ghana) Limited

Airtel (SL) Limited

Airtel Burkina Faso S.A.#

Airtel Congo S.A#

Airtel DTH Services (K)

Airtel DTH Services (Sierra Leone) Limited

Airtel DTH Services Burkina Faso S.A.

Airtel DTH Services Congo (RDC) (incorporated on April 5, 2011) *

Airtel DTH Services Congo S.A.

Airtel DTH Services Gabon S.A (incorporated on May 26, 2011)*

Airtel DTH Services Ghana Limited

Airtel DTH Services Madagascar S.A.

Airtel DTH Services Malawi Limited

Airtel DTH Services Niger S.A.

Airtel DTH Services Nigeria Limited

Airtel DTH Services T.Chad S.A.

Airtel DTH Services Tanzania Limited

Airtel DTH Services Uganda Limited

Bharti DTH Services Zambia Limited

Airtel Madagascar S.A.

Airtel Malawi Limited

Airtel Mobile Commerce (SL) Limited (Formerly Zap Trust Company (SL) Limited)

Airtel Mobile Commerce B.V. (Formerly Zap Mobile Commerce B.V.)

Airtel Mobile Commerce Burkina Faso S.A. (Formerly Zap Mobile Commerce Burkina Faso S.A.) *

Airtel Mobile Commerce Ghana Limited (Formerly Zap Trust Company Limited (Ghana))

Airtel Mobile Commerce Holdings B.V.(Formerly Zap Holdings B.V.)

Airtel Mobile Commerce Madagascar (S.A.) (Formerly Airtel Money Mobile Commerce Madagascar) *

Airtel Mobile Commerce Malawai Limited (Formerly Zap Trust Company Limited (Malawi)

Airtel Mobile Commerce Tanzania Limited (Formerly Zap Trust Company Tanzania Limited)

Airtel Mobile Commerce Tchad SARL (Formerly Zain Mobile Commerce Tchad SARL)

Airtel Mobile Commerce Uganda (Formerly Zap Trust Company Uganda Limited)

Airtel Money Niger (Formerly Zap Niger S.A (Niger)

Airtel Money (RDC) S.p.r.l *

Airtel Networks Kenya Limited #

Airtel Networks Limited

Airtel Rwanda Limited (incorporated on September 2, 2011) *

Airtel Tanzania Limited #

Airtel Towers (Ghana) Limited

Airtel Towers S.L. Company Limited

Airtel Uganda Limited

Airtel (Seychelles) Limited (Formerly Telecom Seychelles Limited)

Bharti Airtel Acquisition Holdings B.V.

Bharti Airtel Burkina Faso Holdings B.V.

Bharti Airtel Cameroon Holdings B.V.

Bharti Airtel Chad Holdings B.V.

Bharti Airtel Congo Holdings B.V.

Bharti Airtel Developers Forum Limited (Formerly Zain Developers Limited)

Bharti Airtel DTH Holdings B.V.

Bharti Airtel Gabon Holdings B.V. #

Bharti Airtel Ghana Holdings B.V. #

Bharti Airtel Kenya B.V. #

Bharti Airtel Kenya Holdings B.V.

Bharti Airtel Madagascar Holdings B.V. #

Bharti Airtel Malawi Holdings B.V. #

Bharti Airtel Mali Holdings B.V.

Bharti Airtel Niger Holdings B.V. #

Bharti Airtel Nigeria B.V. #

Bharti Airtel Nigeria Holdings B.V.

Bharti Airtel Nigeria Holdings II B.V.

Bharti Airtel Cameroon B.V. (Formerly Bharti Airtel Rwanda Holdings B.V.) *

Bharti Airtel RDC Holdings B.V.

Bharti Airtel Services B.V.

Bharti Airtel Sierra Leone Holdings B.V. #

Bharti Airtel Tanzania B.V. #

Bharti Airtel Uganda Holdings B.V. #

Bharti Airtel Zambia Holdings B.V. #

Burkina Faso Towers S.A.

Celtel (Mauritius) Holdings Limited

Celtel Cameroon SA

Celtel Congo RDC S.a.r.l. #

Celtel Gabon S.A.

Celtel Niger S.A.

Celtel Tchad S.A. #

Celtel Zambia plc

Channel Sea Management Co Mauritius Limited

Congo (RDC) Towers S.p.r.l. (incorporated on April 5, 2011) *

Congo Towers S.A.

Gabon Towers S.A. (incorporated on May 17, 2011) *

Indian Ocean Telecom Limited

Kenya Towers S.A.

Madagascar Towers S.A.

Malawi Towers Limited

Mobile Commerce Congo S.A.

Mobile Commerce Gabon S.A

Montana International

MSI-Celtel Nigeria Limited

Niger Towers S.A.

Partnership Investments Sprl

Rwanda Towers Limited (incorporated on September 12, 2011) *

Societe Malgache de Telephonie Cellulaire Sa

Tanzania Towers S.A.

Tchad Towers S.A.

Towers Support Nigeria Limited

Uganda Towers Limited

Zambian Towers Limited

Zap Trust Company Nigeria Limited

Zebrano (Mauritius) Limited (Formerly Zain (IP) Mauritius Limited)

ZMP Limited (Zambia)

(b) Associates/Associate of subsidiary

Alcatel-Lucent Network Management Services India Limited

Bharti Teleports Limited

Tanzania Telecommunications Limited (Associate of Bharti Airtel Tanzania B.V.)

(c) Joint Ventures/Joint Venture of Subsidiary

Forum I Aviation Limited (Joint Venture of Bharti Airtel Services Limited)

Indus Towers Limited (Joint Venture of Bharti Infratel Limited)

Bridge Mobile Pte Limited

(d) Entities where Key Management Personnel and their relatives exercise significant influence/Group Companies

Beetel Teletech Limited

Bharti Airtel Employees Welfare Trust

Bharti Axa General Insurance Company Limited

Bharti Axa Investment Managers Private Limited

Bharti Axa Life Insurance Company Limited

Bharti Enterprises Limited

Bharti Foundation

Bharti Realty Holdings Limited

Bharti Realty Limited

Bharti Retail Limited

Bharti Softbank Holdings Pte Limited *

Bharti Wal-Mart Private Limited

Centum Learning Limited

Comviva Technologies Limited

Fieldfresh Foods Private Limited

Guernsey Airtel Limited

Indian Continent Investment Limited

Jersey Airtel Limited

Nile Tech Limited

(e) Entities having significant influence over the Company

Singapore Telecommunications Limited

Pastel Limited

Bharti Telecom Limited

* Refer note 35 above for details of new operations during the year.

# Transactions of similar nature with such subsidiaries have been dubbed and shown under the head 'Other African Subsidiaries' as their contribution to total transaction value is less than 10%.

Operating Lease - As a Lessor

i) The Company has entered into a non-cancelable lease arrangement to provide approximately 108,860 fiber pair kilometers of dark fiber on indefeasible right of use (IRU) basis for a period of 18 years. The lease rental receivable proportionate to actual kilometers accepted by the customer is credited to the statement of profit and loss on a straight - line basis over the lease term. Due to the nature of the transaction, it is not possible to compute gross carrying amount, depreciation for the year and accumulated depreciation of the asset given on operating lease as at March 31, 2012 and accordingly, disclosures required by AS 19 are not provided.

12. EMPLOYEE STOCK COMPENSATION

(i) Pursuant to the shareholders' resolutions dated February 27, 2001 and September 25, 2001, the Company introduced the "Bharti Tele-Ventures Employees' Stock Option Plan" (hereinafter called "the Old Scheme") under which the Company decided to grant, from time to time, options to the employees of the Company and its subsidiaries. The grant of options to the employees under the Old Scheme is on the basis of their performance and other eligibility criteria.

(ii) On August 31, 2001 and September 28, 2001, the Company issued a total of 1,440,000 (face value Rs. 10 each) equity shares at a price of Rs. 565 per equity share to the Trust. The Company issued bonus shares in the ratio of 10 equity shares for every one equity share held as at September 30, 2001, as a result of which the total number of shares allotted to the trust increased to 15,840,000 (face value Rs. 10 each) equity shares.

(iii) Pursuant to the shareholders' resolution dated September 6, 2005, the Company announced a new Employee Stock Option Scheme (hereinafter called "the New Scheme") under which the maximum quantum of options was determined at 9,367,276 (face value Rs. 10 each) options to be granted to the employees from time to time on the basis of their performance and other eligibility criteria.

The volatility of the options is based on the historical volatility of the share price since the Company's equity shares became publicly traded, which may be shorter than the term of the options.

(viii)The Company has granted stock options to the employees of the subsidiaries i.e. Bharti Hexacom Limited, Bharti Infratel Limited (BIL) and Bharti Airtel International (Netherlands) B.V. and the corresponding compensation cost is borne by the Company. Further BIL has also given stock options to certain employees of the Company and the corresponding compensation cost is borne by BIL.

13. FORWARD CONTRACTS & DERIVATIVE INSTRUMENTS

The Company's activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange contracts, option contracts and interest rate swaps to manage its exposures to interest rate and foreign exchange fluctuations.

The Company has accounted for derivatives, which are covered under the Announcement issued by the ICAI, on marked-to- market basis and has recorded reversal of losses for earlier period of Rs. 82 Mn (including losses of Rs. 156 Mn towards embedded derivatives) for the year ended March 31, 2012 [recorded losses of Rs. 126 Mn for the year ended March 31, 2011]

14. a) The Board of Directors, in its meeting held on May 5, 2011, recommended a final dividend of Rs. 1.00 per equity share of Rs. 5.00 each (20% of face value) for financial year 2010-11, which was duly approved by the shareholders of the Company in the Annual General Meeting held on September 1, 2011

15. During the year ended March 31, 2012, a fire incident had occurred at one of the premises of the Company. The insurance company has been notified about the loss and a preliminary survey has been carried out. The Company is in the process of completing the necessary documentation for claiming the insurance amount. The Company is confident of recovering the full value of the loss amount from the insurer.

16. Details of debt covenant w.r.t. the Company's 3G/BWA borrowings:

The loan agreements with respect to 3G/BWA borrowings contains a negative pledge covenant that prevents the Company to create or allow to exist any Security Interest on any of its assets without prior written consent of the Lenders except in certain agreed circumstances.

17. Previous year figures have been regrouped/reclassified where necessary to conform to current year's classification.


Mar 31, 2010

1. Background

Bharti Airtel Limited (Bharti Airtel or the Company) incorporated in India on July 7, 1995, is a Company promoted by Bharti Telecom Limited (BTL), a Company incorporated under the laws of India.

2. New operations

a) Alcatel-Lucent Network Management Services India Limited (ALNMSIL) was incorporated with the principal business of developing an efficient and cost effective platform and vehicle to provide managed services to the Company. On July 28, 2009, the Company subscribed to 9,000,004 equity shares in ALNMSIL for an aggregate consideration of Rs 90,000 thousand towards 26% stake.

b) On June 5, 2007, the Company acquired 40% equity shares of Bharti Telemedia Limited (BTML) and became holding company of the BTML based on control over composition of Board of Directors. On October 23, 2009, the Company has acquired additional 55% equity shares for a consideration of Rs 73,795 thousand from Bharti Enterprises Limited resulting into 95% total equity interest in BTML.

c) On January 12, 2010, the Company executed agreements for acquiring (through Bharti Airtel Holdings (Singapore) Pte Ltd, its 100% subsidiary) an equity stake of 70% by subscription and transfer of shares in Warid Telecom International Limited, Bangladesh (Warid Telecom) a mobile telecommunication service provider in Bangladesh for an investment of USD 300,100 thousand (Rs 13,912,175 thousand) in the Company. The Company has remitted USD 311,527 thousand (Rs 14,141,667 thousand) to its subsidiary, Bharti Airtel Holdings (Singapore) Pte Ltd towards equity for investment in Warid Telecom, Bangladesh and to meet incidental costs for the acquisition.

d) On March 18, 2010, Bharti International (Singapore) Pte. Ltd has been incorporated as a subsidiary of Bharti Airtel Holdings (Singapore) Pte. Ltd, with an intention of consolidating business interest in Singapore and investment in overseas ventures. Bharti Airtel Holdings (Singapore) Pte. Ltd holds 98.52% stake in the newly incorporated entity and remaining 1.48% stake is held by the ultimate parent company, Bharti Airtel Limited.

e) On March 19, 2010, Bharti Airtel International (Netherlands) B.V., has been incorporated with an intention of creating a hub for the international mobile operations of the Company. Bharti

International (Singapore) Pte. Ltd, holding Company holds 98.90% and remaining 1.10% stake is held by the ultimate parent company Bharti Airtel Limited.

f) On March 30, 2010, the Company has entered into a definitive agreement with Zain Group to acquire Zain Africa BV (Zain) for an enterprise valuation of USD 10.7 bn. The Company, through its overseas wholly owned subsidiary companies, will acquire Zains African mobile services operation in 15 countries with a total subscriber base of over 42 mn. The parties are in process of completing the transaction.

g) In April 2010, the Company has incorporated a wholly owned subsidiary, Airtel M Commerce Services Limited and has invested Rs 20,000 thousand in its 2,000,000 equity shares of Rs 10 each.

3. Contingent liabilities

a) Total Guarantees outstanding as at March 31, 2010 amounting to Rs 30,435,163 thousand (March 31, 2009 Rs 20,895,580 thousand) have been issued by banks and financial institutions on behalf of the Company.

Corporate Guarantees outstanding as at March 31, 2010 amounting to Rs 8,498,147 thousand (March 31, 2009 Rs 1,576,542 thousand) have been given to banks and financial institutions as mentioned above on behalf of GroupCompanies.

Unless otherwise stated below, the management believes that, based on legal advice, the outcome of these contingencies will be favorable and that a loss is not probable.

c) Sales tax

The claims for sales tax as at March 31, 2010 comprised the cases relating to:

i. the appropriateness of the declarations made by the Company under the relevant sales tax legislations which was primarily procedural in nature;

ii. the applicable sales tax on disposals of certain property and equipment items;

iii. lease circuit/ broadband connectivity services; and

iv. the applicability of sales tax on sale of SIM cards, recharge coupons, SIM replacements, VAS, Handsets and Modem rentals.

v. In the State of J&K, the Company has disputed the levy of General Sales Tax on its telecom services and towards which the Company has received a stay from the Honble J&K High Court. The demands received to date have been disclosed under contingent liabilities. The Company, believes, that there would be no liability that would arisefrom this matter.

d) Service tax

The service tax demands as at March 31,2010 relate to: i. roaming revenues charged from other operators; ii. subscriber receivables written off; and iii. cenvat claimed on tower and related material.

e) Incometaxdemand underappeal

Income tax demands under appeal mainly included the appeals filed by the Company before various appellate authorities against the disallowance of certain expenses being claimed under tax by income tax authorities and non deduction of tax at source with respect to dealers/distributors payments. The management believes that, based on legal advice, it is probable that its tax positions will be sustained and accordingly, recognition of a reserve for those tax positions will not be appropriate.

f) Custom duty

The custom authorities, in some states, demanded Rs 2,198,348 thousand as at March 31, 2010 (March 31, 2009 - Rs 2,198,348 thousand) for the imports of special software on the ground that this would form part of the hardware along with which the same has been imported. The view of the Company is that such imports should not be subject to any custom duty as it would bean operating software exempt from any custom duty. Themanagement is of the view that the probability of the claims being successful is remote.

g) Entry tax

In certain states an entry tax is levied on receipt of material from outside the state. This position has been challenged by the Company in the respective states, on the grounds that the specific entry tax is ultra vires the constitution. Classification issues have been raised whereby, in view of the Company, the material proposed to be taxed not covered under the specific category. The amount under dispute as at March 31,2010 was Rs 1,956,008 thousand (March 31, 2009 - Rs 1,020,873 thousand) included in Note 3(b) above.

h) Access charges

Interconnect charges are based on the Interconnect Usage Charges (IUC) agreements between the operators although the IUC rates are governed by the IUC guidelines issued by TRAI. BSNL has raised a demand requiring the Company to pay the interconnect charges at the rates contrary to the guidelines issued by TRAI. The Company filed a petition against that demand with the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) which passed a status quo order, stating that only the admitted amounts based on the guidelines would need to be paid by the Company.

The management believes that, based on legal advice, the outcome of these contingencies will be favorable and that a loss is not probable. Accordingly, no amounts have been accrued although some have been paid under protest.

i) DoT Demands

i) The Company has not been able to meet its roll out obligations fully due to certain non-controllable factors like Telecommunication Engineering Center testing. Standing Advisory Committee of Radio Frequency Allocations clearance, non availability of spectrum, etc. The Company has received show cause notices from DoT for 14 of its circles for non- fulfillment of its roll out obligations. DoT has reviewed and revised the criteria now and the Company is not expecting any penalty on this account.

ii) DoT demands also include demands raised for contentious matters relating to computation of license fees.

j) Others

Others mainly include disputed demands for consumption tax, disputes before consumer forum and

with respect to labour cases and a potential claim for liquidated damages.

The management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable. No amounts have been paid or accrued towards these demands.

k) Bharti Mobinet Limited (BMNL) litigation

Bharti Airtel is currently in litigation with DSS Enterprises Private Limited (DSS) (0.34 per cent equity interest in erstwhile Bharti Cellular Limited (BCL)) for an alleged claim for specific performance in respect of alleged agreements to sell the equity interest of DSS in erstwhile BMNL to Bharti Airtel. The case filed by DSS to enforce the sale of equity shares before the Delhi High Court had been transferred to District Court and was pending consideration of the Additional District Judge. This suit was dismissed in default on the ground of non- prosecution. DSS had filed an application for restoration of the suit but has subsequently withdrawn the restoration application. In respect of the same transaction. Crystal Technologies Private Limited (Crystal), an intermediary, has initiated arbitration proceedings against the Company demanding Rs 194,843 thousand regarding termination of its appointment as a consultant to negotiate with DSS for the sale of DSS stake in erstwhile BMNL to Bharti Airtel. The Ld. Arbitrator has partly allowed the award for a sum of Rs 31,222 thousand, 9% interest from period October 3,2001 till date of award (i.e May 28, 2009) included in Note 3 (b) above and a further 18% interest from date of award to date of payment. The Company has filed an appeal against the said award. Honble Delhi High Court, on October 28, 2009 has directed both the parties to file their submission before the hearing on May 7, 2010.

DSS has also filed a suit against a previous shareholder of BMNL and Bharti Airtel challenging the transfer of shares by that shareholder to Bharti Airtel. The suit was subsequently dismissed as frivolous, which has been appealed to in the Delhi High Court by DSS and subsequently transferred to District Court. DSS has also initiated arbitration proceedings seeking direction for restoration of the cellular license and the entire business associated with it including all assets of BCL/BMNL to DSS or alternatively, an award for damages. An interim stay has been granted by the Delhi High Court with respect to the commencement of arbitration proceedings. The stay has been made absolute. Further against the above Order of Single Judge making the stay in favour of Bharti absolute, DSS filed an appeal before the Division

Bench of Delhi High Court. The matter has been admitted, whereafter the matter reached for arguments and was dismissed on account of non prosecution.

The liability, if any, of Bharti Airtel arising out of above litigation cannot be currently estimated. Since the amalgamation of BCL and erstwhile Bharti Infotel Limited (BIL) with Bharti Airtel, DSS, a minority shareholder in BCL, had been issued 2,722,125 equity shares of Rs 10 each (5,444,250 equity shares of Rs 5 each post split) bringing the share of DSS in Bharti Airtel down to 0.14% as at March 31,2010.

The management believes that, based on legal advice, the outcome of these contingencies will be favorable and that a loss is not probable. Accordingly, no amounts have been accrued or paid in regard to this dispute.

4. Export Obligation

Bharti Airtel has obtained licenses under the Export Promotion Capital Goods (EPCG) Scheme for importing capital goods at a concessional rate of customs duty againstsubmission of bankguaranteeand bonds.

Under the terms of the respective schemes, the Company is required to export goods of FOB value equivalent to, or more than, five times the CIF value of imports in respect of certain licenses and eight times the duty saved in respect of licenses where export obligation has been refixed by the order of Director General Foreign Trade, Ministry of Finance, as applicable within a period of eight years from the import of capital goods. The Export Promotion Capital Goods Scheme, Foreign Trade Policy 2004-2009 as issued by the Central Government of India, covers both manufacturer exporters and service providers. Accordingly, in accordance with Clause 5.2 of the Policy, export of telecommunication services would also qualify.

Accordingly, the Company is required to export goods and services of FOB value of Rs 1,002,766 thousand (March 31, 2009 Rs 2,596,473 thousand) by February 22,2018.

5. a) Estimated amountof contractstobeexecuted on capital

account and not provided for (net of advances) Rs 15,684,080 thousand as at March 31, 2010 (March 31, 2009- Rs 29,526,399 thousand).

b) Under the IT Outsourcing Agreement, the Group has commitments to pay Rs 6,597,050 thousand as at March 31, 2010 (March 31, 2009 - Rs 7,563,213 thousand) comprising of finance lease and service charges. In addition, the future monthly rentals under this contract are determined on a revenue share basis over the non-cancellable period of the agreement.

6. Employee benefits

d) The expected rate of return on plan assets was based on the average long-term rate of return expected to prevail over the next 15 to 20 years on the investments made by the LIC. This was based on the historical returns suitably adjusted for movements in long-term government bond interest rates. The discount rate is based on the average yield on government bonds of 20 years.

e) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

f) The Group made annual contributions to the LICof an amount advised by theLIC. The Group was not informed by LICof the investments made by the LIC or the break-down of plan assets by investment type.

g) Estimated amounts of benefits payable within nextyear are Rs 376,709 thousand (March 31,2009 Rs 242,918 thousand).

j) Other long term service benefits are provided based on actuarial valuation (as per the Projected Unit Credit Method) made at the end of each financial year. Long term service award provided by the Company as at March 31, 2010 is Rs 115,743 thousand (March 31,2009 Rs 95,502 thousand).

JointVentures Entity

b) The Company entered into a Joint Venture with 9 other overseas mobile operators to form a regional alliance called the Bridge Mobile Alliance incorporated in Singapore as Bridge Mobile Pte Limited. The principal activity of the venture is creating and developing regional mobile services and managing the Bridge Mobile Alliance Programme. The Company has invested USD 2,200 thousand, amounting to Rs 92,237 thousand, in 2,200 thousand ordinary shares of USD 1 each which is equivalent to an ownership interest of 10.00% as at March 31, 2010 (March 31, 2009: USD 2,200 thousand, Rs 92,237 thousand, ownership interest 10.00%)

7. During the year ended March 31, 2005 the Company issued USD 115,000,000 Zero Coupon Convertible Bonds due 2009 (the "FCCBs"). The FCCBs are convertible at any time on or after June 12, 2004 (or such earlier date as is notified to the holders of the FCCBs by the Issuer) up to April 12, 2009 by holders into fully paid equity shares with full voting rights with a par value of Rs 10 each of the Issuer ("Shares") at an initial Conversion Price (as defined in the "Terms and Conditions of the FCCBs") of Rs 233.17 per share with a fixed rate of exchange on conversion of Rs 43.56 = USD 1.00. The Conversion Price is subject to adjustment in certain circumstances.

The FCCBs could be redeemed, in whole or in part, at the option of the Issuer at any time on or after May 12, 2007 and prior to April 12, 2009, subject to satisfaction of certain conditions, at their " Early Redemption Amount" (as defined in the "Terms and Conditions of the FCCBs") at the date fixed for such redemption if the "Closing Price" (as defined in the "Terms and Conditions of the FCCBs") of the Shares translated into U.S. dollars at the "prevailing rate" (as defined in the "Terms and Conditions of the FCCBs") for each of 30 consecutive "Trading Days" (as defined in the "Terms and Conditions of the FCCBs"), the last of which occurs not more than five days prior to the date upon which notice of such redemption is published, is greater than 120 percent of the "Conversion Price" (as defined in the "Terms and Conditions of the FCCBs") then in effect translated into U.S. dollars at the rate of Rs43.56 = USD 1.00.

The FCCBs could also be redeemed in whole, and not in part, at any time at the option of the Issuer at their Early Redemption Amount if less than 5 percent in aggregate principal amount of the FCCBs originally issued is outstanding.

The FCCBs could also be redeemed in whole, at any time at the option of the Issuer at their Early Redemption Amount in the event of certain changes relating to taxation in India.

The Issuer could, at the option of any holder of any FCCBs, repurchase at the Early Redemption Amount such FCCBs at such time as the Shares cease to be listed or admitted to trading on the NSE or upon the occurrence of a "Change of Control" (as defined in the "Terms and Conditions of the FCCBs") in respect of the Issuer. These FCCBs were listed in the Singapore Exchange Securities Trading Limited (the "SGX-ST").

8. Rs 2,823,225 thousand (March 31, 2009 Rs 3,424,931 thousand) included under Current Liabilities, represents refundable security deposits received from subscribers on activation of connections granted thereto and are repayable on disconnection, net of outstanding, if any and security deposits received from channel partners. Sundry debtors are secured to the extent of the amount outstanding against individual subscribers by way of security deposit received from them.

9.As at March 31, 2010, 3,130,495 equity shares (of face value of Rs 5) (March 31, 2009 4,180,490 equity shares) of the Company are held by Bharti Tele-Ventures Employees Welfare Trust issued at the rate of Rs 25.68 (Rs 51.36 pre split up) per equity share fully paid up. (Refer Note 30 on Schedule 22)

10. Sales and Marketing under Schedule 17 includes goodwill waivers which are other than trade discount, of Rs 353,713 thousand (March 31,2009, Rs 340,299 thousand).

11.Loans and advances in the nature of loans along with maxiumum amount outstanding during the year as per Clause 32 of Listing Agreement are as follows:

(a) Loans and advances in the nature of loans have been given to subsidiaries. (Refer Note 23 for amount outstanding and maximum amount outstanding during theyear).

(b) Loan and advance in the nature of loan bearing nil interest given to Bharti Telemedia Limited Rs 14,879,527 thousand (March 31,2009 Rs 6,384,291 thousand)

(c) Loan and advance in the nature of loan given to Bharti Airtel Lanka (Private) Limited at LIBOR + 4.5% interest rate is Rs 6,183,649 thousand.

12. Information about Business Segments-Primary

Segment Definitions

The Companys operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Mobile Services - These services cover telecom services provided through cellular mobile technology wherein a subscriber is connected to the network through wireless equipment The subscriber can freely roam around anywhere and stay connected wherever the wireless network coverage is available.

Telemedia Services (formerly Broadband and Telephone Services) - These services are provided through wire-line connectivity to the subscriber. The end-user equipment is connected through cables from main network equipment (i.e. switch) to subscribers premises.

Enterprise Services - During the period, effective April 1, 2009, the Company has reported erstwhile Enterprise Services - Carrier Segment and Enterprise Services - Corporate Segment under Enterprise Services Segment in accordance with its accounting policy on segment reporting. These services cover domestic and international long distance services and internet and broadband services. Long distance services are intermediary services provided to the service providers of cellular or fixed line services. Internet and broadband services are used to provide bandwidth and other network solutions to corporate customers.

Other operations - These comprise the unallocated revenues, profits / (losses), assets and liabilities of the Company, none of which constitutes a separately reportable segment. The corporate headquarters expenses are not charged to individual segments.

13.Related Party Disclosures :

In accordance with the requirements of Accounting Standards (AS) -18 on Related Party Disclosures, the names of the related parties where control exists and/or with whom transactions have taken place during the year and description of relationships, as identified and certified by the m anagement are:

List of Related Parties:

Key Management Personnel :

Sunil Bharti Mittal

Manoj Kohli

Sanjay Kapoor (w.e.f. March 1, 2010)

Other Related Parties

Name of the Related Party and Relationship

Subsidiary Companies

Bharti Hexacom Limited

Bharti Airtel Services Limited

Bharti Telemedia Limited

Bharti Airtel (USA) Limited

Bharti Airtel Lanka (Private) Limited

Bharti Airtel (UK) Limited

Bharti Airtel (Canada) Limited

Bharti Airtel (Hongkong) Limited

Bharti Infratel Limited

Network i2i Limited

Bharti Airtel Holdings (Singapore) Pte Limited

Bharti Airtel (Singapore) Private Limited

Bharti International (Singapore) Pte Limited

(subsidiary of Bharti Airtel Holdings (Singapore) Pte Limited)

Bharti Airtel International (Netherlands) B.V (subsidiary of Bharti International (Singapore) Pte Limited) *

Warid Telecom International Limited (subsidiary of Bharti Airtel Holdings (Singapore) Pte Limited)*

Bharti Infratel Lanka (Private) Limited

(subsidiary of Bharti Airtel Lanka (Private) Limited)

Bharti Infratel Ventures Limited

(subsidiary of Bharti Infratel Limited)

Associates

Alcatel-Lucent Network Management Services

India Limited *

Bharti Teleports Limited

Joint Venture/Joint Venture of Subsidiary

Forum I Aviation Limited Indus Towers Limited Bridge Mobile Pte Limited

Entities where Key Management Personnel exercises significant influence/Group Companies

Beetel Teletech Limited (formerly Bharti Teletech Limited)

Bharti Airtel Employees Welfare Trust (formerly Bharti Tele-ventures Employees Welfare Trust)

Bharti Axa General Insurance Company Limited

Bharti Axa Investment Managers Private Limited

Bharti Axa Life Insurance Company Limited

Bharti Enterprises Limited

Bharti Foundation

Bharti Realty Holdings Limited

(formerly Tamarind Projects Private Limited)

Bharti Realty Limited

(formerly Bharti Realty Private Limited)

Bharti Retail Limited

(formerly Bharti Retail Private Limited)

Bharti Wal-Mart Private Limited

Centum Learning Limited

Comviva Technologies Limited

Fieldfresh Foods Private Limited

(formerly Bharti Del Monte India Private Limited)

Guernsey Airtel Limited

Jataayu Software Limited

(merged with Comviva Technologies Limited

w.e.f 01-04-2008)

Jersey Airtel Limited

Telecom (Seychelles) Limited

Entity having significant influence

Singapore Telecommunications Limited

Pastel Limited

Bharti Telecom Limited

* Refer Note 2 on Schedule 22

25.Finance Lease-as a Lessee

The Company entered into a composite IT outsourcing agreement, whereby the vendor supplied fixed assets and IT related services to the Company. Based on the risks and rewards incident to the ownership, the fixed asset and liability are recorded at the fair value of the leased assets at the time of receipt of the assets, since it is not possible for the Company to determine the extent of fixed assets and services under the contract at the inception of the contract. These assets are depreciated over their useful lives as in the case of the Companys own assets.

Since the entire amount payable to the vendor towards the supply of fixed assets and services during the year is accrued, the disclosures as per AS 19 are not applicable.

There are no restrictions imposed on lease arrangements.

14.Employee stock compensation

(i) Pursuant to the shareholders resolutions dated February 27, 2001 and September 25, 2001, the Company introduced the "Bharti Tele-Ventures Employees Stock Option Plan" (hereinafter called "the Old Scheme") under which the Company decided to grant, from time to time, options to the employees of the Company and its subsidiaries. The grant of options to the employees under the ESOP Scheme is on the basis of their performance and other eligibility criteria.

(ii) On August 31, 2001 and September 28, 2001, the Company issued a total of 1,440,000 equity shares at a price of Rs 565 per equity share to the Trust. The Company issued bonus shares in the ratio of 10 equity shares for every one equity share held as at September 30, 2001, as a result of which the total number of shares allotted to the trust increased to 15,840,000 equity shares.

(iii)Pursuant to the shareholders further resolution dated September 6, 2005, the Company announced a new Employee Stock Option Scheme (hereinafter called "the New Scheme") under which the maximum quantum of options was determined at 9,367,276 options to be granted to employees from time to time on the basis of their performance and other eligibility criteria.

(iv)All above options are planned to be settled in equity at the time of exercise and have maximum period of 7 years from the date of respective grants. The plans existing during the year are as follows:

15.Earnings per share (Basic and Diluted):

The board of directors in its meeting held on April 29, 2009 have approved sub-division (share split) of existing equity shares of Rs 10 each into 2 equity shares of Rs 5 each, which was duly approved by postal ballot by the shareholders of the Company on July 11,2009. Accordingly, EPSfortheyear ended March 31,2010 and previous year has been restated, as applicable, below:

16.Forward Contracts & Derivative Instruments

The Companys activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange contracts. Option contracts and interest rate swaps to manage its exposures to interest rate and foreign exchange fluctuations

The Company has accounted for derivatives, which are covered under the Announcement issued by the ICAI, on marked-to-market basis and has recognized reversal of losses of Rs 42,467 thousand for theyear ended March 31, 2010 [recorded reversals of losses for earlier period of Rs 1,835,399 thousand for theyear ended March 31,2009 (including reversal of losses recognised in earlier periods Rs 1,230,080 thousand towards embedded derivatives)]

17.The Board of directors in its meeting held on April 29, 2009 had approved sub-division (share split) of existing equity shares of Rs 10 each into 2 equity shares of Rs 5 each, which was duly approved by postal ballot by the shareholders of the Company on July 11,2009

18 .a) The Board of directors in its meeting held on April 29, 2009 had proposed dividend of Rs 2 per share for the financial year 2008-09, which was duly approved by the shareholders of the Company in the annual general meeting held on August 21, 2009. Accordingly, dividend and tax thereon on shares issued from April 1, 2009 to August 21, 2009 (record date for payment of dividend), has been accounted for

19.The Company has undertaken to provide financial support, to its subsidiaries Bharti Airtel Services Limited, Bharti Airtel (USA) Limited, Bharti Airtel (Canada) Limited, Bharti Airtel Hongkong Limited, Bharti Infratel Ventures Limited, Bharti Telemedia Limited, Bharti Airtel (Singapore) Private Limited, Bharti Airtel Holdings (Singapore) Pte Limited, Bharti Airtel Lanka (Pvt) Limited and Bharti Airtel (UK) Limited

20.The Board of directors recommended a final dividend of Re 1 per equity share of Rs 5 each (20% of face value) for financial year 2009-10. The payment is subjectto the approval of the shareholders in the ensuing Annual General Meeting of the Company

21.Previous year figures have been regrouped / reclassified where necessary to conform to current years classification

 
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